Known in the electricity industry as ‘The Renewables Directive’, 2009/28/EC is an update of the original 2001/28/EC. Article 15 of this Directive is titled, “Guarantees of origin of electricity, heating and cooling produced from renewable energy sources”, and explains the basic regulations behind the Guarantee of Origin system. The directive can be viewed in its entirety, here.
This directive from the European Commission is better known as, ‘The Electricity Directive’. The directive lays out a number of rules and regulations for various parts of the renewable energy sector including disclosure rules. The directive can be viewed directly, here.
Association of Issuing Bodies
The AIB is a member association that attempts to coordinate rules, transfers and cancelations of energy tracking certificates within Europe. They have recently introduced the AIB-inter registry hub to help facilitate the international exchange of energy certificates between all countries. There website is linked: www.aib-net.org.
Electricity attributes are factual information that can be gained through the cancelation of a GO certificate (or another reliable tracking certificate). To differentiate the electricity attributes the consumer would normally receive from the grid (e.g. grams of CO2/kWh, electricity production source, land of the produced electricity etc.) a consumer must use a reliable electricity tracking system.
Bundled green products
Bundled electricity is the delivery of both physical electricity and electricity tracking certificate(s) from an energy supplier, in one package, to the consumer. Many European nations have regulated that all specific (fossil, renewable, wind etc.) electricity products must cancel the sufficient amount of Guarantees of Origins to make the product legal for delivery to the consumer. Bundled electricity products have no chance of double counting electricity attributes if they use a reliable tracking system at their core (such as the Guarantee of Origin system in Europe).
Cancellation is the physical ‘use’ of a GO certificate and the method of allocating the attributes of that electricity to a single end-user. Cancelling a GO is the only way to remove a GO from the market and redeem its benefits. Cancelling ensures that the certificate will not be traded, given, sold, or used by another end-user. End-consumers will most often purchase GOs with the intent of eventually cancelling it as opposed to selling it again for another end-user to cancel.
Certificates often refer to the vehicle used to carry the electricity attributes certified via an electricity tracking system. In Europe, the primary certificate used by electricity tracking systems is the Guarantee of Origin or GO. In other locations, like the United States, the certificate used is the RECs (Renewable Energy Certificate). A certificate is often bought, sold and cancelled with prices determined by a supply and demand market.
Claims can be made after an end-user has cancelled, or had cancelled on his/her behalf, a certificate from a reliable tracking system. After the cancellation of a Guarantee of Origin a consumer can claim the type of electricity they used as well as other factual information based on the origins of the electricity certificate they canceled.
Double counting, double attributing, and double claiming all refer the risk of electricity attributes being allocated intentionally, or unintentionally, to two separate end-users. The Guarantee of Origin system standardized by EECS makes all forms of double counting, attributing and claiming impossible. Additionally proper disclosure mechanisms ensure that the general public is given correct information about their electricity usage.
The EECS (European Energy Certificate System) is a standardization system for the European Guarantees of Origin (GOs). Nations that are members of the AIB and adhere to the EECS system are easily able to trade GOs cross-border with no risk of double counting, claiming or attributing. When most stakeholders refer to the GO voluntary market, they are referring to the standardized EECS-GO market.
Electricity attribute tracking system
Electricity attribute tracking systems are usually based on the fundamentals of a book-and-claim system. In the case of electricity, this means that electricity is placed onto the grid. This step is measured, and certified, through a number of organizations including the grid-operator, power producer, and certificate issuer. The certificate issuer will make note on a certificate that a given quantity of electricity was placed onto the grid, from a specific power station at a specific time – the certificate issuer then books the certificate into the tracking system. This certificate is given, sold, or acquired by an end-user who will own this certificate. The end-user then claims ownership of this certificate and makes it impossible for another to again trade, sell or acquire the attributes.
Such a system for electricity is needed because it is impossible to track electricity via the grid. Electricity tracking systems based on a book and claim system exist in the USA, Canada, Japan, South Africa, Australia and Europe.
European 20-20-20 Targets
European policy makers introduced goals for the year 2020 in a number of different sectors. In the energy sector the 2020 goals were based on the three pillars leading European energy policy: Security of supply, competitive markets and sustainability. The 2020 energy goals are to have a 20% (or even 30%) reduction in CO2 emissions compared to 1990 levels, 20% of the energy, on the basis of consumption, coming from renewables and a 20% increase in energy efficiency.
An electricity supplier must annually disclose their fuel-mix to their customers according to the European Directive 2009/72/EC. The fuel-mix is the mix of different electricity production sources that make the total electricity a supplier sells to consumers. These different production sources combine their emission information (g of CO2/kWh) total, as well as a mg of radioactive waste per kWh total. A consumer can obtain a different fuel-mix than the one they are delivered by correctly using an electricity tracking certificate like the Guarantee of Origin.
An electricity supplier delivering different products, with different fuel-mixes, must us GOs to prove these different fuel-mixes. This is regulated in some countries.
Guarantee of Origin
The Guarantee of Origin (GO or GoO) is the tracking certificate regulated in the European Directive 2009/28/EC, article 15. The GO is further standardized via the European Energy Certificate System (EECS) provided by the Association of Issuing Bodies (AIB). The EECS makes trade, cancelation and use of GOs standardized across Europe.
The GO has no inherent price except for the price given to it by the supply and demand market. The GO is the carrier of electricity attributes.
Power Purchase Agreements
A PPA is a contract between the purchaser and supplier of energy or electricity. The PPA contract lays out how much electricity the supplier has promised to place on the grid and how much the consumer will take off. A PPA most often guarantees an electricity price beyond just guaranteeing the supply. A PPA however can never deliver electricity attributes that are different from the grid-average unless a tracking certificate (like GOs) are transferred in combination with the electricity. A PPA is a private document and as such the delivery of attributes, such as the attributes delivered with a GO, would be double counted as they are not removed from the grid-average fuel mix in a residual mix.
The RES (Renewable Energy Services) Market is a term often used within the energy industry to mean a variety of different things. Currently most will refer to the RES market as a way of explaining that renewable energy services must be made more cost-efficient and brought to the marketplace. Often those talking about the RES market are referring to the use of electricity tracking systems as a way to bring cost-efficiency to electricity production.
The residual mix is the grid attribute (emission, radioactive waste, etc.) average that is not allocated to a specific individual or end-consumer. If a consumer uses grid electricity without the cancelation of a GO certificate (or other reliable tracking mechanism) than they are obligated to use the residual mix when calculating/reviewing their consumed electricity attributes (footprint). Organizations that are part of the European E-Track program, like Reliable Disclosure Systems for Europe (www.reliable-disclosure.org) calculate the national residual mixes annually.
Scoping is a method of calculating one's carbon footprint. Carbon accounting (also known as personal disclosure or carbon footprinting) involves counting all the CO2-e that you or your company has released, or is responsible for releasing.
Scope 1 refers to onsite emissions (e.g. natural gas usage), Scope 2 is for off-site direct emissions (e.g. electricity usage), and Scope 3 accounts for all other indirect emissions (e.g. employee travel or off-site meetings). GOs provide the consumer a way to manage their Scope 2 emissions. For more information on scoping visit the website of the Green House Gas Protocol.
Unbundled electricity is the delivery of both physical electricity and electricity tracking certificate(s) coming to one end-consumer from two separate sources. This means that the end-consumer may have a contract with an electricity supplier but also a contract with a GO supplier. In this way the consumer is able to negotiate for the best price for both of the commodities. Most large corporations will choose for unbundled electricity products.
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