Verification hitch to green market launch -- Independent certification of green credits still needed

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The full liberalisation of the Dutch green energy market could become a reality as early as January 1, 2001 -- if a reliable system of certification can be put in place by that time. So concludes a report commissioned by the country's economics ministry (EZ) and recommended for the approval of the Dutch parliament. Should no such system be developed, however, the Netherlands could be left without any effective means of stimulating its own renewables market, whilst spearheading the campaign to establish a pan-European trade in renewable energy certificates.

According to the economics minister, Annemarie Jorritsma, Dutch green power consumers could be free to choose their suppliers from the beginning of next year. At present some 140,000 environmentally conscious consumers have opted to pay their local power companies a premium price for nominally green electricity -- with the extra revenues being returned to develop renewables generation.

With the spirit of altruism acting as the primary market mover, to date there has been little incentive to go bargain-hunting for green power. But a hike in the rate of ecotax (REB) charged on grey power -- which came into force in January (Windpower Monthly, January 2000) has meant that for some consumers it is now actually cheaper to buy a zero-rated green power package than to pay the new higher rate of carbon tax on grey power. To fend off an anticipated run on their limited reserves of renewable energy, a number of power companies have upped the price of their green power packages to preserve the price differential. Others, however, will effectively be selling green power at less than the price of grey -- or so it will work out for a significant number of consumers.

The market, in other words, is ripe for a liberalisation which would allow consumers not only to choose between the various green power schemes operated by established power companies, but to buy directly from the renewables producer or a new breed of green power brokers. With no physical link between the green kilowatt hours generated and sold, a simple certification system guaranteeing their equivalence is clearly imperative -- as Jorritsma makes clear. Whether this can be done in time is now the key question and the current indications are not encouraging.

Independence question

According to Jorritsma, it is the power companies which are responsible for finding a "simple working system which does not require the use of complex new IT-systems." Not so, says Peter Niermeijer of power producers' umbrella organisation EnergieNed. Unless the certification authority is totally independent the system will not work, he argues.

"Given the market's sensitivity to the trustworthiness of the certification authority, it is imperative that the issue and registration of the certificates be entrusted to an independent body, such as the EZ itself." Although he thinks it a "bloody shame" that fundamental questions about the independence or otherwise of the issuing body should still be being debated this late in the day, he believes it is still possible to meet the January 1 deadline.

If the ministry is unwilling to act as the certification authority it has another option, Niermeijer explains. It can issue a set of basic commitments or minimum criteria stating the conditions which any certification system must fulfil, and then it can leave it up to the industry. This could be done almost immediately as EnergieNed has already drawn up a "minimum criteria" document as part of the Renewable Energy Certificate (REC) campaign to set up a renewable energy trading system in Europe (Windpower Monthly, March 2000).

End of covenant

"But the government must act now," says Niermeijer. "The current voluntary agreement between the power companies and government to purchase green labels expires at the end of this year and the industry does not want to enter into another such covenant."

Should no certificate system be developed for the end of the year and the Dutch utilities reject any further commitments for buying specific quotas of renewables power, Dutch renewables could be heading into a disastrous policy vacuum similar to the hiatus between the end of subsidies in 1995 and launch of the green label system in 1998. The only difference being that this time wind and other forms of renewable energy would be competing on a fully liberalised energy market with no visible means of support.

This would be doubly ironic as the EnergieNed sponsored "minimum criteria" document is set to enter an initial test phase across Europe this October. If it is successful, explains Niermeijer, it will eventually allow green energy certificates issued by independent bodies in countries as diverse as Denmark, Sweden, Norway, Finland, the UK, Belgium Italy, France and Austria to be traded across borders. The question is, whether any Dutch certificates will be part of that trade.

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