Integrated Tradable Green Certificate Markets: Functioning and Compatibility

Many countries plan to increase the proportion of their electricity supply obtained from renewable sources relative to nonrenewable sources. Recently, the EU has implemented a system of tradable emission permits and many countries have introduced systems of tradable green certificates (TGCs). In this paper, we analyze how integrated TGC markets function and how they are affected by harsher CO2 emission constraints. A key result of our analytical model is that TGCs may be an imprecise instrument for regulating the generation of green electricity. Furthermore, our analysis shows that the combination of TGCs with a system of tradable emission permits may yield outcomes contrary to the intended purpose. The results are valid under both autarky and international trade.Renewable energy; electricity; green certificates; emissions trading.

Integratation of Tradable Green Certificate Markets: What can be expected?

Recently, many countries have introduced systems of tradable green certificates (TGCs) in order to increase the proportion of their electricity supply obtained from renewable sources. The main objective of this paper is to investigate the analytics of a TGC system of the Nordic type when integrated within several countries and to determine what can be expected from the system when applied in a real world setting. Both an analytical and a partial equilibrium version of the model are applied. In particular, we ask whether it is possible to derive analytically clear cut results with respect to how the system affects generation of electricity from renewable resources, and from carbon emitting resources, in the same way as it is possible for other known policy instruments such as an emission permit system or a plain carbon emission tax. A key result is that TGCs may be an imprecise instrument for regulating the generation of green electricity and that the combination of TGCs with a system of tradable emission permits may yield outcomes contrary to the intended purpose.Renewable energy; electricity; green certificates; emissions trading

Gain without pain: an international case for a tradable green certificates system to foster renewable energy development in Ukraine

This paper elaborates on the theoretical and methodological fundamentals of a tradable green certificates system to foster renewable energy development in Ukraine. It proposes a management mechanism premised on the classical market model of tradable green certificates aiming at increasing the share of electricity from renewable energy sources in the country's energy mix. Organizational stages of the mechanism formation at the national level and a methodological approach to assess green electricity generation cost are developed. The modeling has shown that the annual increase in the cap for green electricity consumption by 1% will raise the electricity tariff by 3%, which is not a significant financial burden for consumers. The proposed changes in the tradable green certificates system can be an effective management tool to achieve the required amount of electricity from renewable energy sources in the country's total electricity consumption and to foster the development of the Ukrainian renewable energy sector

Promoting renewable electricity generation in imperfect markets: price vs. quantity policies

The search for economically efficient policy instruments designed to promote the diffusion of renewable energy technologies in liberalized markets has led to the introduction of quota-based tradable ‘green’ certificate (TGC) schemes for renewable electricity. However, there is a debate about the pros and cons of TGC, a quantity control policy, compared to guaranteed feed-in tariffs, a price control policy. In this paper we contrast these two alternatives in terms of social welfare, taking into account that electricity markets are not perfectly competitive, and show that the price control policy dominates the quantity control policy in terms of social welfare.Tradable green certificates, Renewable portfolio standard, Quota target, Feed-in tariff, Cournot duopoly

Tradable Green Certificates as a Policy Instrument? A Discussion on the Case of Poland

Quota obligation schemes based on tradable green certificates have become a popular policy instrument to expand power generation from renewable energy sources (RES). Their application, however, can neither be justified as a first-best response to a market failure, nor, in a second-best sense, as an instrument mitigating distortionary effects of the emissions externality, if an emissions trading system exists that fully covers the energy industry. We study how ancillary reasons, in form of overcoming various barriers for RES use and establishing beneficial side-effects, such as industry development, energy security, and abatement of pollutants not covered under the ETS, apply to the scheme recently introduced in Poland. While setting substantial expansion incentives, an advantage for local industry or job-market development or energy security can hardly be seen. With rising power prices for end consumers and awareness that the extra rents from the schemes mostly accrue to foreign investors and renewable and polluting generators, we expect a negative impact on social acceptance for RES and RES deployment support policies.tradable green certificates, environmental policy, Poland, Resource /Energy Economics and Policy,

Action plan for deriving dynamic RES-E policies

The core objective of this project is to facilitate a continuous and significant increase in the share of RESE with minimal costs to European citizen. To identify the most important strategies (e.g. Tradable Green Certificates, Feed-In Tariffs, Investment Subsidies, Emissions Trading, CO2-taxes) in a dynamic way the computer-based toolbox Green-X has been developed. Although within the scope of this project it has not been feasible to investigate all possible issues within this field, the cases analysed cover not only the needs and opportunities at the level of the national Member States, but also those at the level ofthe EU. However, the most important ones have been treated thoroughly. This report, which is the final outcome from the Green-X project (Contract No: ENG2-CT-2002- 00607), with funding from the European Commission, DG Research, provides recommendations on the way forward for the promotion of renewable energy for electricity generation in the EU. It is addressed primarily to energy policy maker, as well as to other people interested in renewable energy and energy policy

Integrating Market Based Instruments for Pollution Control - Strategic Option for Enhancing Competitiveness within Energy Industry -

The paper aims to emphasize the efficiency of using market based instruments for both reducing pollution and enhancing competitiveness within the energy industry. Given the previous experience of European countries, as well as the characteristics of the main market based instruments, the paper is focused on developing two alternatives for combining green certificates schemes, white certificates schemes and emissions trading schemes (black certificates schemes) in strategic options, aiming to increase the competitiveness of the energy industry and to decrease the emissions generated within this field. Each strategic option presented includes an integration scheme, as well as the main advantages and disadvantages deriving from the implementation of these mechanisms. The paper also demonstrates that an integrated market based instruments’ scheme is more efficient and even cost-effective than using single instruments. The whole analysis places a higher focus on white certificates, as these are the more recent market based instrument for enhancing competitiveness within energy industry.competitiveness, energy industry, green certificates, market based instruments, pollution control, white certificates.

Managing Renewable Energy: The Romanian Practice

There are several support systems used by the governments of the European Union’s countries for the promotion of renewable energy. The aim of this study is to explore the Romanian managerial approach used to encourage the renewable energy generation and consumption. First part of the study is focused on revealing the variety of national support systems used within the European Union to encourage renewable energy, and furthermore, the second part of the study explains the Romanian approach. The paper provides a rational approach for finding solutions to the problems of renewable energy promotion in the European Union. The findings of this study may be the subject of managerial know-how international transfer and may be used as a starting point for further investigations on renewable energy endorsement.renewable energy; policy instruments; good practices; green certificates; Romania’s economy.

Methodology for forecasting in the Swedish–Norwegian market for el-certificates

In this paper we describe a novel methodology for forecasting in the Swedish-Norwegian el-certificate market, which is a variant of a tradable green certificate scheme. For the forecasting, the el-certificate market is integrated in the electricity-market model EMPS, which has weekly to hourly time-step length, whereas the planning horizon can be several years. Strategies for the certificate inventory are calculated by stochastic dynamic programming, whereas penalty-rates for non-compliance during the annual settlement of certificates are determined endogenously.In the paper the methodology is described, and we show the performance of the model under different cases that can occur in the el-certificate market. The general results correspond to theoretical findings in previous studies for tradable green certificate markets, in particular that price-scenarios spread out in such a way that the unconditional expected value of certificates is relatively stable throughout the planning period. In addition the presented methodologies allows to assess the actual dynamics of the certificate price due to climatic uncertainty. Finally, special cases are indentified where the certificate price becomes excessively high respectively zero, due the design-specific dynamics of the penalty rate. © 2015 Elsevier Ltd.Methodology for forecasting in the Swedish–Norwegian market for el-certificatesacceptedVersio

Green certificate trading

This paper proceeds as follows: Section 2 briefly outlines the policy instruments available for the promotion of renewable energy sources, while section 3 discusses green certificate trading in more detail, including the green certificate market in South Africa at present. Section 4 describes the international implementation of renewable energy support mechanisms. The lessons learnt from this experience in terms of design suggestions for the development of a South African TREC framework are detailed in Section 5. Also from international experience, Section 6 provides a comparison of a feed-in tariff scheme and a quota obligation system combined with tradable green certificates. Finally, the interaction between emission trading schemes and renewable energy promotion systems are outlined in Section 7