Abstract
Policies to promote renewable electricity are increasingly seen as a way to reduce the negative environmental impacts associated with electricity consumption and meet growing electricity demand. This paper reviews the international experience with one such policy, namely, renewable energy certificates, and considers important design aspects of a national green certificate system. Within a South African context, a green certificate system would provide a mechanism with which to verify compliance with any future renewable energy obligations, and would encourage renewable electricity generation in the current monopoly environment. In terms of a national green certificate framework, international experience has shown that renewable energy certificates must be both accredited and standardized, with enforcement of penalties for non-compliance with renewable energy quotas. Above all, a long-term and stable policy environment is crucial for developing renewable energy markets.
Highlights
tradable renewable energy certificates (TRECs) – known as renewable energy certificates (RECs), green certificates or green tags, represent the renewable value or greenness of electricity produced from renewable sources, and are used to simplify the burden of verifying compliance with renewable energy targets and provide flexibility in meeting the target (Linden et al, 2005)
In mandatory markets, where producers or consumers are obligated to produce or consume specified quantities of renewable energy, TRECs provide a mechanism for the verification and monitoring of compliance with such obligations
The Issuing Body is responsible for accreditation of renewable energy generators via a physical device audit; registration of accredited renewable energy generators; issuing of TRECs in market participant accounts in a central database; operating the TREC register and administering market participant accounts; transferring TRECs; facilitating the international transfer of TRECs where compatible; redeeming certificates; and ongoing monitoring, development and evaluation of the TREC system. (DME, 2007)
Summary
Strong action is needed to reduce global greenhouse gas (GHG) emissions and reverse the trend towards higher global temperatures (Stern Review, 2007). In the 2003 White Paper on Renewable Energy, while recognizing South Africa’s dependence on fossil fuels to meet energy requirements, the state acknowledged the growing need for South Africa to become a responsible ‘global neighbour’, amid mounting concerns about global climate change (DME, 2003). In this context, the 2003 White Paper on Renewable Energy sets out government’s vision for promoting renewable energy in South Africa: Government’s long-term goal is the establishment of a renewable energy industry producing modern energy carriers that will offer in future years a sustainable, fully non-subsidised alternative to fossil fuels.
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