Acrimonious and emotional meeting -- EU certificate trade

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Views are apparently becoming ever more entrenched on both sides of the debate over European cross-border trade in renewable energy electricity certificates. A meeting chaired by the European Commission last month to discuss the issue failed to produce anything approaching a constructive outcome, with those who support certificate trade being subject to near ridicule by those intent on protecting existing market frameworks based on fixed purchase prices for green power.

The Commission wants to introduce trade in guarantees of origin (GO) of renewables electricity to enable Europe to meet its ambitious new target of 20% of energy from renewables by 2020 (Windpower Monthly, December 2007). Cross-border trade in GO will give countries flexibility to meet their share of the 20% goal, the Commission believes, by allowing those with plentiful resources to share the cost of fully exploiting them with countries lacking in affordable resources, even if there is no physical link between their electricity systems.

The concept of such virtual trade of green power is strongly resisted, however, by some in the renewables community, including the European Renewable Energy Council, which represents a broad range of renewables, and some small scale operators. They fear that trade in renewable certificates will threaten existing national support systems. Some also fear it as a first step towards "harmonisation" of support across Europe to create a single market for trade of renewable energy.

Germany is particularly aggressive in its opposition to the Commission's plan. Michael Müller, parliamentary secretary of state at the federal environment ministry, revealed the line across which the Commission will find it hard to step at a wind conference in Berlin, held just before the Commission's meeting. In a vehement defence of Germany's renewable energy law and its fixed power purchase prices, he said: "We will not accept that German wind is wrecked. The renewable energy law is a successful measure that is not to disappear in a unification measure. I warn against a unification of cultures."

In favour of trading energy certificates are electricity trade association Eurelectric, renewable energy trading certificate body RECS International, and a number of Europe's utilities. An exception is Spanish utility Iberdrola, the world's leading owner of wind power assets, which is fiercely opposed to any move down the trade route.

Circulating in Brussels

The European Commission is expected to introduce trade in certificates in a proposal for a new renewable energy directive due this month. In one of the drafts of the directive that have been circulating in Brussels, the Commission appears to be wavering between two options for trading GO. In the first, the preferred option among groups who have been resisting the Commission's plans, trade would be voluntary. Member state governments would determine to what extent -- if any -- they will open their renewables market to import and export of GO. Only if a country fails to meet its target, might it be required to accept GO from other countries.

The second option would lead to more open markets with trade allowed between generators, the holders of GO, and electricity retailers seeking to meet green power mandates. Member states would not be able to block exports of GO, but would have discretion over whether to allow imports -- unless, as with the first option, the member state fails to meet its target.

Critics of the first option for a voluntary approach say it will severely limit trade. Instead of buying and selling between dozens of generators and electricity retailers to create a liquid market, they say it confines trade in GO to 27 players -- the 27 EU member states.

The aim of the meeting on December 6 was to bring these opposing sides together to discuss the different viewpoints without the grandstanding that often takes place in a more public context. Yet the meeting, which was described by one participant as acrimonious and "quite emotional," is said to have consisted of a number of statements from the participants, without any opportunity to reply or delve into the detail. The absence of any concrete proposal from the Commission also hindered focussed discussion said another observer.

Meantime, the debate looks set to intensify even further after January 23 when the Commission publishes the final version of its proposal for a renewables directive.

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