politician proposes a softer approach
A proposal to separate the three different functions of Guarantees of Origin (GO) for renewable energy proposed under new European legislation has been put forward by European parliament member Claude Turmes. The Luxembourg MEP, who is the parliament's "rapporteur" for the draft renewables directive, has unveiled a raft of suggested amendments to the European Commission's proposed new law, which sets targets for each country's contribution towards reaching the overall target of 20% renewables power by 2020.
In Turmes' version of the directive, he turns around the commission's provisions for trade of renewable energy certificates across national borders so it no longer requires countries who do not want to trade to opt out of the new market for GO. Instead he proposes that countries wishing to import and export renewables certificates opt in to a separate system altogether.
The Commission proposes that GO, which provide proof of the origin of electricity from renewables, would be used by member states primarily to demonstrate compliance with their new renewables targets. This has alarmed Europe's renewable energy trading community which currently uses GO for labelling green electricity and selling it into the voluntary green power market the length and breadth of Europe.
Turmes rates the commission's proposal's for GO as one of the weakest points in the draft directive. He wants to see GO limited to their current "disclosure" function. Target accounting should not be done through GOs, he says, but on the basis of verified data from EUROSTAT, the European Community's statistical office. The third function of GO is to be the currency used by countries for sharing out the benefits of renewable energy. Turmes proposes that this function be taken over by Transfer Accounting Certificates (TACs). These will allow member states the flexibility of meeting their targets through cross-border transfers of TACs between companies and by joint projects.
Explaining his thinking, Turmes says the Commission's plan to roll the three functions into one certificate creates a single item which under the terms of the EU treaty must be allowed to be traded. But if companies are free to trade renewable power in this way, the current markets for renewables, all of which are underpinned by national support systems, would disintegrate and legal uncertainties for investors would be created, he says. "The solution to this legal problem is to separate the three functions given to GOs."
Turmes also proposes that the interim targets placed on each country on the way to meeting their share of the 20% goal be binding, with stiff penalties for failing to meet them. "Ninety euros per missed megawatt hour of renewable energy would be an appropriate penalty basis," he says. Money collected from defaulting countries would be used to reward those that exceed their targets.
Under Turmes' plan, countries would be given flexibility to reach their interim goals by trading or by co-operating to create regional renewables markets, sharing their targets and national support mechanisms. Trade would be facilitated by exchanging TACs. But, as is proposed in the draft directive, the exporting country would only be able to transfer TACs once it was on track to meet its targets.
On the issue of grid access, Turmes has strengthened the Commission's proposal so that costs of grid reinforcements to connect renewables "shall" rather than "may" be borne by transmission and distribution system operators. "Why should these costs be paid exclusively by renewables investors whereas in the 1960s, 70s and 80s the costly grid infrastructure for the big centralised systems were not paid by the energy companies?" he asks.
Turmes also wants to drop the 10% target for biofuels in transport. The evidence shows that a binding target on fuels for the transport sector cannot be achieved in a sustainable way, he says.
For renewable certificate trading organisation RECS International, Turmes' amendments would constitute a barrier to trade. The most significant change concerns the "opt out" option, says Peter Niermeijer of RECS. "Turmes has changed it to an opt in option." By preventing the operation of the free market, this amendment breaches the EU treaty, he says. "One way or another, the internal [energy] market is there and if one or more member states try to stop trade, they are in breach of the treaty."