Cross border trade needs political will -- Scandinavian green certificates

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There are no major technical obstacles to establishing cross border trade of green energy credits between Sweden and Norway, says Nils Andersson of Swedish utility Vattenfall. Andersson designed the market structure for trade of elcertifikats in Sweden, a system which has been operating successfully since 2003. The only obstacle to a pan Scandinavian market for certificate trade is the political will to make it happen, says Andersson.

He believes a single market in which green certificates generated by renewable energy producers could be bought and sold by electricity retailers would be a good move for both Norway and Sweden. "In the end, the Swedish market is just too small to have its own system," says Andersson. Sweden's electricity retailers are required to submit certificates demonstrating that a rising proportion, or "quota," of their sales are based on purchases of power from renewables generators.

"I originally thought, and still do think, the system should be expanded to include Norway, Finland, and Denmark. In fact, as I see it, it is a great idea for all of Europe," continues Andersson. "Create the quota level, and the market will fix the certificate price."

Under the Swedish system, retailers must source 16% of their requirement from renewables this year, up from 15% last year, with the proportion eventually rising to 25% by 2016. Prices for certificates, with one certificate equivalent to 1 MWh of power supplied to the grid, have been around SEK 0.20/kWh (EUR 0.021/kWh). The country is aiming for 30 TWh of wind generation by 2020.

Although the Norwegian government pulled out of plans for a common certificates market with its neighbour two years ago, talks between the two countries are back on again, at least informally. With a self imposed July 1 deadline, Norway's energy minister Åslaug Haga is working with her Swedish counterpart, Maud Olofsson, to make it happen.

While there is no overt opposition in Sweden to a joint system, the government appears to be adopting a wait and see policy with an eye on the progress of the European Commission's proposal for cross-border trade of "guarantees of origin" (GO) representing green power generation. Although the Commission backed away from making trade in GO mandatory in its draft renewable energy directive, now being considered by governments, some countries are still anxious to see the Commission's original plan acted upon.

If Sweden drags its feet, Andersson believes Norway should go ahead with its own system with a view to it being aligned with Sweden's market at a later date. He says he has already counselled the government to that effect.

Marius Gjerset of Norway's Zero Emission Resource Organization concurs, suggesting Norway could devise a short-term hybrid system for the interim that sets a maximum and minimum price for certificates, but he insists the most important thing is to secure an agreement between the two countries. "I can understand that for Sweden, right now there is no real hurry, while here there is," he says. "What would be best is to simply come up with an agreed common system and then make changes necessitated by the EU directive later."

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