Options for Design of Tradable Green Certificate Systems

The main conclusions with regard to the design of Tradable Green Certificate (TGCs) systems for the penetration of renewable energy are as follows. Any design of a national promotion system based on TGCs should: • Provide substantial pressure to actors in the market without making it impossible to reach their goals. • Provide sufficient security for investors; provide a stable and predictable growing market for renewables over time. • Incorporate flexibility mechanisms such as banking, borrowing or compliance to targets averaged over several periods. • Ensure liquidity and transparency of the TGC-market. • Provide customers with sufficient information to allow them to make informed choices. • Anticipate on international trade of green certificates in the future and on interaction with future Carbon Emission Trading schemes. There are no major barriers foreseen for starting national TGC-systems. However, for international trade several issues remain to be solved. These include the procedure of international trade, how to deal with different levels of subsidies and the question what country will get the political credit if a certificate is not consumed in the country of production but elsewhere. These difficulties indicate that formalised EU-wide trade cannot be expected in the near future. However , it is expected that international trade based on voluntary demand will happen soon, because this is in principle possible without government interference. Furthermore, formal trade between a limited number of countries, forming 'TGC-trading bubbles' probably will already occur within the next two years. These trading bubbles will provide a good learning ground for international trade and will largely influence the evolution of a wider system. To ensure that the needs of later entrants in TGC-trading are reflected, we recommend the European Commission to set up an open discussion forum for policy makers from all Member States. The sharing of information in such a forum will allow 'first movers' to reflect other Member States' needs in their bilateral agreement so that entry in a later stage will be possible more easily. Dissemination. The results of the first two phases have been reported in the Mid-Term Report (ECN-C-99-072). The current report comprises the result of the Design phase. A preliminary draft of this report has been the basis for discussion in the Dissemination phase: A workshop for policy makers on the issue of international aspects of tradable green certificates, held in Brus-sels, 8 December 1999. The proceedings of the workshop as well as …