Promoting Green Power in Canada - Centre for Human Settlements

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Promoting Green Power in Canada Pollution ProbeOtherPowerRetailerCaliforniaEnergyCommissionSubsidy/customer creditPowerRetailerPowerRetailerat premiumno premiumGreenPowerProducerPowerConsumerGreenPowerProducerPowerConsumerScenario C: In the case of bundled greenpower sales, both electricity and greenattributes are sold to a retailer, who can sellthese at a premium to power consumers.This case will also apply in regulatedmarkets, in which independent powerproducers can only sell to one electricityretailer. (the ultimate owners of the greenbenefits are depicted in red)Scenario D: In California, the customercredit has made it possible to sell greenpower at a discount compared to genericpower products. However, the fact that nopremium was charged does not mean thatthe green attributes were not sold to theconsumers, since the credit is only paid toconsumers opting for green power; inessence, financing the premium otherwiseto be paid.Figure 5.6 — Bundled Green Power Sales and Change of Ownership of EnvironmentalAttributesbenefits, but a separate sale of each benefitwould be possible if markets for differentpollutants existed. Alberta-based VisionQuest offers green tags and certified CO 2emission reductions, with both based on itswind power generation activities. All of itstags are certified for the CO emission2reductions benefits that are included in theaggregated environmental benefits.The question is, what “green benefits” woulda green tag or green power customer bepurchasing if several reduction credits havealready been sold off? Many residentialcustomers would have problems graspingthe concept of disaggregated green benefits,which may hamper the sales of greenattributes if environmental organizationsand others criticize such a practice when theinformation provided to consumers isinsufficient or misleading. In addition, ifrenewable power producers are fullyincluded in emissions reduction markets,double sales of some of the green benefitsmight occur if emissions reduction trades areadded to the current sales structures, whichpre-suppose aggregated benefits.Figure 5.8 suggests that a clear line must bedrawn between consumer markets andindustrial emissions credit markets. In orderto avoid the confusion of residentialconsumers by complicated concepts linkedto the disaggregation of green benefits, greenpower producers should be obliged to decide144
Promoting Green Power in Canada Pollution ProbeFigure 5.7 — Disaggregation of Environmental Attributes of Green Powerto sell the benefits linked to a given MWhamount of electricity produced either fullyaggregated to consumer markets ordisaggregated into industrial emissionscredit markets. This means that if even oneemissions credit is taken from the greenbenefits, then the green tags cannot be soldas green power into retail markets.Depending on whether or not markets existfor other emissions credits, the remainingtradable green benefits can also be sold intoindustrial markets.As green tags cannot be used for both credittrading and green power sales at the sametime, they cannot be used for either of thesepurposes and, at the same time, for RPScompliance. In theory, an RPS could allowthe sale of either green power or emissionscredits on all obligatory units of generation,leaving each retailer three options to recoverthe extra cost for buying the (usually moreexpensive) renewable electricity: the retailercould (a) average this extra cost over thecustomer base and charge all customers aConsumer Market(aggregated benefits)Industry Markets(disaggregated emission reductions)PowerRetailerindirectNO x AllowanceMarketPowerConsumerGreenPowerProducerNO xSO 2 etc.CO 2Other Markets(if existent)PowerConsumerdirectCO 2 OffsetMarketFigure 5.8 — Aggregated and Disaggregated Sales of Green Benefits145
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