Promoting Green Power in Canada - Centre for Human Settlements

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Promoting Green Power in Canada Pollution Probetags also reduce the overall compliance costfor retailers under such schemes as they canopt for the cheapest available green powersources instead of being restricted to theirown service areas.5.7 Double-Counting, Disaggregationof Green Attributes andOwnership5.7.1 Green Tags for RPS, Green Powerand Emissions Credit TradingDouble-counting is one of the potentialproblems with green power products. Thisproblem exists with all green powerproducts, not just tags, and many of theobservations and recommendations in thischapter can be applied to all such products.Figure 5.4 shows that it is not permitted tosell the same green electricity unit (a givenamount of electricity produced fromrenewables, in MWh) to a consumer directlyand once more to a retailer, who can retail it,together with electricity from the grid, asgreen power to another consumer.Throughout the following illustrations, theultimate purchaser of green tags, or greenpower, is also considered to have acquired allof the green attributes of renewableelectricity. In practice, emission reductionsare often retired on behalf of the customers,rather than handed on via tradablecertificates.If more green power is produced than aretailer agreed to buy (in this case, to fulfillan RPS obligation), in the case of a windfarm, for example, because of strongeraverage winds in a given year, then the excesstags could be sold to other parties, as can beseen from Figure 5.5. Tags could be soldeither directly to consumers or to otherretailers.Figure 5.6 shows two scenarios in whichgreen benefits are sold as bundled greenpower products. Scenario C depicts thestandard case, which will be encountered inregulated markets, with one monopoly powerretailer per region. Scenario D shows the“California” situation, in which no premiumhad to be paid by green power customers.The fact that no premium was paid shouldnot be interpreted to mean that theElectricityto gridPowerRetailerElectricityto gridPowerRetailerGreenPowerProducerElectricityPowerConsumerGreenPowerProducerPowerConsumerBundled greenpower productScenario A: Tags can be sold directly to aconsumer, while the electricity is obtainedfrom the default retailer (the ultimate ownersof the green benefits are depicted in red)Scenario B: Tags can be sold as greenpower to a consumer via a retailer whorebundles the tags with null electricity fromthe grid.Figure 5.4 — Green Tag Sales and Re-bundling of Attributes and Electricity142
Promoting Green Power in Canada Pollution ProbeElectricityto gridPowerRetailerRPSobligationGreenPowerProducerPowerConsumerOtherPowerRetailerPowerConsumerFigure 5.5 — Sales of Excess Green Tags (the ultimate owners of the green benefits aredepicted in redownership of tags did not shift to thecustomers since the customer credit is themechanism used to finance the premium,which would otherwise be paid by thecustomers opting for green power. The retailershould therefore not be allowed to sell thegreen benefits separately to another party.Apart from green power and RPS certificatetrading, there is another option to obtainvalue for the green benefits of renewablepower — the sale of disaggregatedenvironmental attributes as emissionsreduction credits. The green attributes ofelectricity made from renewables compriseenvironmental (e.g., avoided emissions,reduced consumption of depletableresources) and social (e.g., employment, realestate prices, psychological benefits)benefits. As separate markets for emissionsreductions are emerging in the United States,especially in the framework of the FourPollutant Bill, renewable power producersare lobbying to be allocated allowances, orreduction credits, for emissions avoidedthrough their activities [NWCC 2001b]. Thesedevelopments could trigger the separate saleof environmental attributes, as opposed tothe current practice of selling all attributestogether in a green tag or as green power.Figure 5.7 shows how the green benefits maybe disaggregated into different categories,such as nitrogen oxide emission reductionsand avoided carbon dioxide emissions.The separate marketing of green benefits hasalready begun. For example, when Timberlandpurchased green tags through Native Energyfor its US retail stores, its main interest wasto become a CO 2neutral business [NE2002]. Native Energy offers the tags based onavoided CO 2emissions, based on the regionalpower mix. The company has recentlyteamed up with Green Mountain Power tooffer CO 2emission reductions to homes andbusinesses in Green Mountain’s service area[SA 2002]. A case of disaggregation of greentags also took place in 2001 when theBonneville Environmental Foundation (BEF)bought green tags, the carbon offset elementof which was transferred to The ClimateTrust for permanent retirement, asmentioned in Chapter 5.5. In this case, BEFalso retired the other environmental143
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