What is the target compliance market?

The target compliance market is the possible, but not yet realized, method of reaching mandated renewable energy targets through the cancellation of guarantee of origin certificates or other reliable tracking systems. 

While some nations have linked their renewable energy targets with certificate systems (most obviously Norway and Sweden) it is a highly under used resource. Many experts believe that by introducing more competition via certificate markets costs to the taxpayer could be reduced.  

By utilizing international certificate schemes nations would be able to support projects where they are most efficient, for example solar power in Spain, wind in the Netherlands, or biomass in Germany and compete for the rights to these services (rights) via certificates. This model would not exempt internal production but only encourage the use of cost-effective and highly-efficient renewable energy capacity growth across borders.

Some locations around the world are using energy certificate trading much more efficiently.  In the United States for example a RECs certificate, or Renewable Energy Certificate, can be used on the voluntary market or the target compliance market. Individual states can choose from what region compliant RECs certificates can originate as well as if a certain percentage of the target must be met from local production. In this way individual states will have a local increase in installed capacity but also help build renewable electricity where it is most cost-efficient.