Wallonia takes lead on credit trading -- A break with the pasts

The Walloon region of southern Belgium has introduced green power credit trading from October 1. "We have a choice," declared José Daras, Wallonia energy minister, on the launch of the market. "We can treat the EC directive on the liberalisation of the electricity market as an opportunity or as an obligation. In applying the directive, the Wallonia government and parliament aims to integrate the three elements of sustainable development: economic, social and environmental."

The credit trading system is part of the liberalisation of the region's energy market. During the market's first 12 months, electricity retailers are obliged to meet a 3% standard for renewable energy in their supply portfolios. To demonstrate they have met the portfolio standard they must buy green certificates at the rate of one certificate per MWh. The proportion of renewables will then rise by 1% a year, to reach 7% in 2007. In 2005 the government will decide the green power standard for the years after 2007.

Green certificates for electricity produced elsewhere in Belgium will be accepted in the Walloon region; certificates originating in other countries will be accepted under conditions to be set by the Wallonia government.

Producers of electricity may sell their green certificates on the market or hand them in to the energy ministry in exchange for a guaranteed subsidy, which will be fixed for up to ten years. The details of the subsidy part of the scheme are still to be confirmed.

Fines for laggards

Companies that do not meet the standard will be fined EUR 75 for each missing certificate over the first six months and thereafter EUR 100 per certificate per quarter. The newly created regulator, the Commission Wallonne Pour l'Énergie (CWaPE), will oversee implementation of the market rules.

The regulator is currently considering applications from potential power producers who want to set up in competition with national utility Electrabel. Daras made it clear that the Wallonia government is serious about encouraging renewables. "It is essential that we ensure equal access to the grid to all producers -- both the established Electrabel and new entrants -- in conditions which ensure the viability of their activities," he said. The decree puts an end to Electrabel's quasi-monopoly. "It is a first break with the past."

Daras said that he expected to see wind farms constructed in the near future. Plans are laid for 125 large wind turbines of 1.5 to 2 MW each on 20 sites in the Walloon region, to produce 1.5% of the region's electricity.

For its part, Electrabel has been keen to be seen to be as green as the times demand. In July, the company was granted planning permission for the first wind farm in the Walloon region, at Roderhöhe near Bütgenbach in the Hautes Fagnes. Four 2 MW wind turbines will be erected at a cost of EUR 9.6 million. The plant is expected to come online in spring 2003.

As well as planning the country's first offshore wind farm, Electrabel has applied for planning permission to install 86 wind turbines (130 MW) in Belgium, 34 of them (72 MW) in the Walloon region. The company's declared strategy is to diversify its power generation, but only with green power projects that are "economically viable," says the utility's Philippe Massart.

Utility doubts

He is doubtful that green credit trading will work in Belgium, pointing out that there are now four separate green power credit markets in the works (box), three to be operated by regional governments, including the Walloon market, and a federal system. It is "too complex for a small country," says Massart. "There is no coherence between the four."

Moreover, without broad political will to meet green power goals, such as in Germany, Denmark and Spain, Massart does not believe that opposition to siting wind turbines across the country will be overcome. "This leads us to the conclusion that the quota will, by far, not be reached. The fines will be a sort of taxes," he concludes.