Netherlands

Netherlands

Europe wide trading scheduled to start -- Green certificates open doors to new markets for wind kilowatt hours

Europe's 18 month test phase of renewable energy certificate trading is underway and on schedule. Metering began on January 1 and the first certificate will be issued and printed on April 1, says Peter Niermeijer, chairman of the Renewable Energy Certificates (RECS) group. The aim of RECS is to set up a pan-European system of green certificate trading to "enable the development of renewable energy in Europe with maximum economic efficiency in a way that is consistent with the liberalisation of energy markets." Members of the group gathering in Amsterdam, the Netherlands, last month, included new national teams from France and Finland.

"Denmark and Italy are 99% certain, and the UK is still waiting on one signature. All we're missing is Spain and Portugal," says Niermeijer, reviewing the troops, which to date include teams from all the Scandinavian countries, Germany, the Netherlands, Luxembourg, Belgium, and Austria.

The presence of representatives from the Swedish, German, British, Belgian and Dutch governments as well as the EU's transport and energy directorate general, DG TREN, provided further evidence of the campaign's gathering momentum and increased political weight. RECS has now been appointed an official EC observer.

"With such a strong government presence we were able to begin a very open dialogue on demand-side harmonisation and the import/export aspects of international trade in certificates," says Niermeijer.

Three models

"Basically we saw three models emerging," he says. In model one, the Italian approach, international and national market systems would exist alongside each other. "Here people will be able to choose on a monthly basis whether they are going to use the official Italian national market or the international market for their certificates. Effectively there will be a sort of Chinese wall, so that only the official Italian certificates would be admissible on the national market, and RECS certificates from outside the country wouldn't penetrate that market."

The second model follows the UK proposal of limiting imports by linking them to the physical transport of electricity -- in the UK's case through the interconnector cable with France. The third, a Dutch, model, is based on the principle of reciprocity: "We say, look we have organised a certain demand in this national market -- by tax facilities for example -- and if, for example, Norway has no substantial demand, then it's reasonable that we exclude Norwegian certificates from this market," explains Niermeijer.

Open discussion

It is not part of RECS' remit, however, to endorse any one system. "There is no official RECS position. What we want is an open discussion and for governments to take part on the platform because we are still just a platform, and the solution to the question of demand side harmonisation has to be political."

A political solution is also required for the issue of RECS compatibility with any future CO2 emissions trading scheme. "In Amsterdam we posed the question: should all environmental benefits be included in the certificate? Obviously, the answer should be yes, but then we have to take into account countries like Italy which have their own CO2 scheme under which CO2 is traded separately and so they can't agree to that rule. Obviously it's a problem which has to be solved, but which is not up to RECS alone."

For the time being, the voluntary test phase is underway with data already being collected for feeding into the system to produce the first certificates in April. "By the end of March, we will have something to show the world and will launch the system at a public meeting in Brussels," says Niermeijer.

An internet-enabled Renewable Energy Certificate Trading simulation (RECerT-sim) involving 16 countries is to take place in May, run by the UK's Energy for Sustainable Development (ESD) and New Zealand company M-co. A specially developed on-line trading platform has been developed by M-co "to teach generators, traders, suppliers and consumers how to maximise benefits and minimise risk." M-co established and implemented the competitive New Zealand electricity marketplace.

"Obviously M-co is hoping the simulation will lead to a real market in green certificates. That kind of market has some big advantages. It will promote the development of new renewable energy schemes at least cost to consumers, send the right sort of signals about locating renewable energy generation near the best resource and is socially responsible while being fully consistent with the principles of liberalised energy markets," says M-co's Phil Bradley.

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