Promoting Green Power in Canada - Centre for Human Settlements

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Promoting Green Power in Canada Pollution Probe• overseeing the creation of validrenewable energy certificates;• assessing annual compliance statements;• imposing any penalties for noncompliancewith the provisions of thelegislation;• redeeming any renewable power shortfallcharges if shortfalls are made up withinthree years; and,• ensuring the integrity of the measure andundertaking audits of participants,including renewable power generatorsand liable parties.5.4.3 The NetherlandsThe Dutch “groencertificaten” (greencertificates) are used to obtain an exemptionfrom the energy tax of 6 €cents per kWh(small consumers). This makes theNetherlands’ system unique among green tagschemes as the green certificate price is fixedby the amount of the tax instead of beingdetermined by the market. The greencertificates only exist as digital data and arenot sold to residential customers. As theNetherlands could not cover its ownskyrocketing residential demand for greenpower, green electricity from other countrieshas also qualified for green certificates sinceJuly 2001.The trading system is administered byGroencertificatenbeheer (Green Certificatesbody/GCB), which maintains a record of thegeneration of and trade in green power.Subject to certain conditions, the owners ofplants where electricity is generated usingwind or solar energy, hydropower or biomassmay register with GCB as a generator, as wellas registering their plants with the regionalelectricity grid administrator to which theplants are (to be) connected. The gridadministrator in question checks the plantand the connection and installs a measuringdevice for the uniform registration of thequantity of electricity fed into the electricitygrid. The plant’s owner receives aGroenverklaring (Green declaration) inexchange, following which it registers withthe GCB. The latter opens an account inwhich the deliveries of sustainably generatedelectricity are posted. On July 1, 2001 thegrid administrators performed the referencemeasurement of plants that had beenregistered as of that date. Subsequentmeasurements by the same grid administratorswill be used in calculating and reporting tothe GCB the quantities of electricity thathave been sustainably generated.The GCB generates an “electronic certificate”for each MWh supplied, coded on the basisof the plant’s connection number, thusproviding for the subsequent traceability ofthe electricity. There are four Green Certificatesdenominations (i.e., 1, 10, 100 and 1,000MWh). The Certificate is credited to theaccount number of the trader having beendesignated by the generating company. TheGCB’s system exclusively caters for certificatetransfers (i.e., not for financial transactions).Generating companies and traders/suppliersof sustainable energy may register with theGCB as traders. A “current account” for theCertificates will then be opened for them.The GCB records the ownership of theCertificates and their transfer to anotherregistered party.The parties can access their own accountusing a secured login connection, so as torequest information and completetransactions. Any trader that supplies greenelectricity to an end user instantly becomes asupplier. The trades should report the GreenCertificates registered in the suppliers’ nameto the Inland Revenue department. To theextent that a matching quantity of power haseffectively been supplied, Inland Revenueapplies the energy tax (REB) exemption (seeBox 4.9 in chapter 4.5.3). When the GCBtransfers a Certificate to Inland Revenue’saccount, the Certificate is cancelled. All otherCertificates are automatically cancelled onexpiry of a one-year period from the date ofissue. This ensures the reconciliation of thequantities of sustainable electricity that have134
Promoting Green Power in Canada Pollution Probebeen generated and used up on an annualbasis [GCB 2002].Imports of foreign green power have alsobeen tax exempt since January 1, 2002.Certificates are only accepted from countrieswith competitive electricity markets(currently only Germany, Sweden, Norway,Finland and the United Kingdom) and theremust be sufficient import capacity forphysical delivery of the imported electricity[NREL 2002, p. 36].5.4.4 Great BritainIn the UK, the Utilities Act 2000 puts anobligation on suppliers to supply increasedamounts of renewable power over thecoming years (i.e., 3.0% of the power supplyin fiscal 2002 and 7.9% in fiscal 2007). Thisobligation has to be fulfilled by creatingRenewable Energy Obligation Certificates(ROCs). The legislation allows for ROCs tobe obtained through the purchase of greentags inside and outside the country, startingin January 2002. Large industrial energyconsumers are required to obtain a certainpercentage of the energy they annuallyconsume from an authorized green energysource, and are penalized for failure to meetthis requirement. As a part of this process,authorized green power generators receiveROCs from the regulatory authoritiesaccording to the amount of electricitygenerated. The certificates may be sold tosuppliers or to the market, separately fromelectricity.Britain uses yet another kind of certificates,which are similar to the Dutchgroencertificaten. Since the Climate ChangeLevy does not apply to renewable powerconsumers, they are exempt from it based onLevy Exemption Certificates (LECs). TheseLECs do not represent the actual carbonemission offset of renewable power, whichcould still be traded separately from it. Theycan only be traded together with theelectricity produced. The savings are spiltbetween the power generator and consumer,with the retailer getting a margin [DTI2002c] (see also Chapter 3.4.2).5.4.5 OntarioAlthough Ontario has not yet legislated anRPS, the establishment of a deregulatedmarket means that green power is mostlysold unbundled. To buy green power, anOntario customer will generally stay withhis/her current power provider and willsubscribe to a different retailer offering agreen tag product (see Figure 5.3). Thecustomer will thus pay for electricity to thesame default provider as before, but will paya green premium to the other retailer, and soclaim the green attributes of renewableelectricity fed into the grid on his/her behalf.Green power marketers (e.g., Green TagsOntario) have acknowledged this situationby calling their power a “tag product.” Thealternative, i.e. that the power retailer sellsboth the power and the green attributes as abundled green power product, is lessattractive due to special licensingrequirements with the Ontario Energy Boardfor green power retailers.5.5 The Future of Green TagsThe US National Wind CoordinatingCommittee (NWCC) has developed principlesand guidelines on green tag trading [NWCC2001b]. The Committee heavily advocatesthe disaggregation of environmentalattributes, and supports the creation of atrading system for CO 2, SO 2, NOx, andmercury emissions avoidance credits. Giventhat the Bush administration’s “Clean Skies”initiative proposes a system of tradableemissions credits that will lead to loweremissions (including mercury), similar tothe system already in place for sulfur dioxideemissions, the disaggregation of greenattributes is a very probable scenario. TheCommittee states that the disaggregation ofattributes is best confined to compliance135
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Promoting Green Power in Canada - Centre for Human Settlements

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