Promoting Green Power in Canada - Centre for Human Settlements

Promoting Green Power in Canada Pollution ProbeExperience throughout the United States andEurope shows it can be difficult to find enoughretail customers ready to pay a premium forgreen power. If a renewable power facility isonly be able to sell part of its productionunder a green pricing or green marketingprogram, then the separate sale of greenattributes into credit markets would providean alternative source of income covering theshare of production for which no greenpremium can be obtained in retail markets.If renewable power needs to rely on thisincome to compete with conventionalelectricity, then credit trading programs shouldcover as many types of emissions as possible,and each should allocate the an adequateamount of allowances to renewable powerfacilities in order to maximize this income.However, the separate trading of multipleenvironmental benefits may also put a newburden on the shoulders of renewable powergenerators and/or retailers — theadministrative cost of trading. The moretypes of credits traded, the more transactionsthat need to be made as compared to thesale of all green attributes together. As theknow-how about credit markets may belimited with many smaller renewable powerproviders, they may have to rely on brokersor associations for their credit trading.Brokering cost can reduce the income fromcredit trading by up to 15% [IOU 2002].Thus, Canadian credit markets should be asstable as possible in order to increaseinvestor confidence.5.7.2 Ownership of EnvironmentalAttributes and CertificateTrackingAs the ownership of environmentalattributes is passed on to customers, thecustomers could, in turn, offer them back toemissions trading markets. However, oncethis happens, the customers also lose allclaims to have received renewable power. Forexample, a retail chain buying green tags andtelling customers that they conduct all oftheir business using renewable power wouldmake a false claim if the customers did notretain and retire the tags they bought. Thissituation is generally avoided by not passingon the actual emissions reduction benefits tothe customer, but instead retiring them onthe customer’s behalf. The above-mentionedrenewable power retailer, Native Energy, worksaccording to this scheme, and all greenbenefits are donated to an environmentalorganization, Clean Air — Cool Planet, thatretires all certificates purchased by NativeEnergy customers.In the US, issues concerning ownership ofattributes are still being debated. TheCalifornia-based Center for Resource Solutions(Green-e) has carried out a significantamount of consultation and analysis on theissue of ownership in the context of itscertification of green tags (called TRCs,Tradable Renewable Certificates). In its FinalRecommendations, it takes the position that“the purchase of TRCs assumes the transferto the final consumer of the renewable powerincluding all of its attributes unless otherwisenoted by contract.” It also recommends thatattributes remain bundled for all sales ofgreen energy products to the consumermarket [CRS 2001, p. 25f.]. In Canada, theDiscussion Draft ECP-79 of a new Guidelineon Renewable Low-Impact Electricity omits aclause contained in a previous version,which required ownership of environmentalattributes to pass to the retailer or user, andreplaced it by a declaration of intent tomonitor developments about this issue[ECP-79, p. 9]. This was criticized by anumber of parties during the public reviewperiod, arguing that a certified green powerproduct would not be worth the money paidfor it without passing on the ownership ofits greenness [ECP 2002, pp. 11ff.].TerraChoice’s Green Leaf TradeableRenewable Certificate Program Standard,however, stipulates that the environmentalattributes of green tags are passed on to theend user [TCES 2002, p. 8]. Ontario’semissions trading regulations do not addressthe possible double sale of attributes as148