Renewable Energy Certificates Research Articles

Enhancing renewable energy certificate transactions through reinforcement learning and smart contracts integration

Given the complexity of issuing, verifying, and trading green power certificates in China, along with the challenges posed by policy changes, ensuring that China’s green certificate market trading system receives proper mechanisms and technical support is crucial. This study presents a green power certificate trading (GC-TS) architecture based on an equilibrium strategy, which enhances the quoting efficiency and multi-party collaboration capability of green certificate trading by introducing Q-learning, smart contracts, and effectively integrating a multi-agent trading Nash strategy. Firstly, we integrate green certificate trading with electricity and carbon asset trading, constructing pricing strategies for the green certificate, carbon, and electricity trading markets; secondly, we design a certificate-electricity-carbon efficiency model based on ensuring the consistency of green certificates, green electricity, and carbon markets; then, to achieve diversified green certificate trading, we establish a multi-agent reinforcement learning game equilibrium model. Additionally, we propose an integrated Nash Q-learning offer with a smart contract dynamic trading joint clearing mechanism. Experiments show that trading prices have increased by 20%, and the transaction success rate by 30 times, with an analysis of trading performance from groups of 3, 5, 7, and 9 trading agents exhibiting high consistency and redundancy. Compared with models integrating smart contracts, it possesses a higher convergence efficiency of trading quotes.

Economic–environmental trade-offs based support policy towards optimal planning of wastewater heat recovery

Wastewater heat, a promising alternative to traditional district heating and cooling sources, can be recovered using heat pumps and transmitted to surrounding buildings for winter heating and summer cooling. Despite its potential benefits, the policies to support wastewater heat recovery remain limited. This study provides support policies for local governments to encourage energy recovery in urban wastewater treatment plants, incorporating subsidies and renewable energy certificates. The local government aims to maximize the recovered energy, minimize the subsidy expenditure, and minimize the certificate price. Urban wastewater treatment plants seek to optimize producer profits under realistic planning constraints. This model was applied in Chengdu, China, which indicates that plants with a daily treatment scale exceeding 30,000 m3 can invest in heat recovery without support policies, achieving recovery ratios of only 27%–29%. As the calculated electricity charge accounts for about 90% of operating cost, the electricity price subsidy proves the most significant in improving the installed capacities, followed by renewable energy certificates, capital refunds, and tax reductions. Electricity prices and renewable energy certificates have combination and substitution effects. Further analysis shows that heat pump efficiencies have low sensitivity in project feasibility. Fluctuations in infrastructure costs have a minimal impact, while charges for heating and cooling services significantly influence feasibility. Lowering the available thermal energy ratio also affects project returns. The government can reduce risks in sensitive parameters by electricity price subsidies or renewable energy certificates.

A blockchain AI solution to climate change

Background: Climate change represents a critical global challenge, hindered by skepticism towards data manipulation and politicization. Trust in climate data and its policies is essential for effective climate action. Objective: This perspective paper explores the synergistic potential of blockchain technology and artificial intelligence (AI) in addressing climate change and how their integration can enhance the transparency, reliability, and accessibility of climate science. Methods: The paper analyzes the roles of blockchain technology in enhancing transparency, traceability, and efficiency in carbon credit trading, renewable energy certificates, and sustainable supply chain management. It also examines the capabilities of AI in processing complex datasets to distill actionable intelligence. The synergistic effects of integrating both technologies for improved climate action are discussed alongside the challenges faced, such as scalability, energy consumption, and the necessity for high-quality data. Results: Blockchain technology contributes to climate change mitigation by ensuring the transparent and immutable recording of transactions and environmental impacts, fostering stakeholder trust, and democratizing participation in climate initiatives. AI complements blockchain by providing deep insights and actionable intelligence from large datasets, facilitating evidence-based policymaking. The integration of both technologies promises enhanced data management, improved climate models, and more effective climate action initiatives. Conclusion: The integration of blockchain technology and AI offers a transformative approach to climate change mitigation, enhancing the accuracy, transparency, and security of climate data and governance. This synergy addresses current limitations and futureproofs climate strategies, marking a cornerstone for the next generation of environmental stewardship.

Urbanization, trade openness, and industrialization as a determent of clean energy consumption: Evidence from BRI nations

Energy and economic policies should include the intricate interconnections among urbanization, trade openness, industry, and the utilization of renewable energy. This study investigates the intricate connections among nations involved in the Belt and Road Initiative (BRI). The study employed panel econometric techniques, including DSUR, Cup-BC, and CUP-FM, to document independent variables' elasticities. Study findings suggest that urbanization is initially negatively correlated with renewable energy consumption (REC) because of the rising demand for energy, particularly non-renewable sources. Urbanization beyond a certain threshold fosters renewable energy, showcasing the positive effects of Renewable Energy Certificates (RECs). The influence of urbanization on energy use has changed throughout time. Furthermore, there is an initial positive relationship between trade openness and REC, indicating that adopting liberalized trade policies encourages the use of clean energy. Nevertheless, over time, this connection becomes less strong, suggesting a critical moment when the promotion of trade openness may lead to an increase in the use of non-renewable resources. Industrialization first stimulates the need for traditional energy sources but ultimately encourages using renewable energy. The U-invert connection demonstrates the interplay between industrialization and energy consumption patterns, emphasizing the need for flexible policies. Our study assists policymakers and stakeholders in effectively addressing energy sustainability concerns related to the Belt and Road Initiative (BRI).

Optimal design of renewable energy certificate multipliers using an LCOE-Integrated AHP model: A case study of South Korea

Finding and developing a reasonable design for renewable energy certificate (REC) systems is essential for societies to realize their policy goal of establishing optimal renewable energy portfolios and to minimize the controversy that surrounds REC multipliers. However, it is challenging to assess the adequacy of REC multipliers on a logical and quantitative basis. To fill this gap, we develop a levelized cost of electricity (LCOE)-integrated analytic hierarchy process (AHP) model as a quantitative method for identifying and analyzing appropriate REC multipliers. Our model prioritizes cost-effectiveness and social concerns as the two core factors of consideration in determining REC multipliers, and then quantitatively analyzes each using the LCOE and AHP methods. We also present results of analysis applying the proposed model for the Korean REC market. Our findings reflect the renewable energy market conditions and policy objectives in Korea, while revealing related needs such as the long-term policy objective of ensuring stability of power supply. The Korean government recently revised the REC multipliers adopting the results from our model, and in consideration of overall government policy, the diverse interests of stakeholders, and the need to ensure institutional consistency and market stability.

Excess demand or excess supply? A comparison of renewable energy certificate markets in the United Kingdom and Australia

Comparing the United Kingdom's Renewables Obligation and Australia's Renewable Energy Target, this paper reconstructs the market for green certificates in which penalties are imposed on missed certificates. Our analysis shows that excess demand in the Renewables Obligation makes the penalty the minimum certificate price, but excess supply in the Renewable Energy Target makes the penalty the maximum certificate price. Further, excess supply also implies that the sales of certificates are not guaranteed in the Renewable Energy Target. Therefore, compared to the Renewables Obligation, generators face greater risk under the Renewable Energy Target as there is more uncertainty about the price of certificates and the possibility of sales.

An assessment of the effect of gross capital formation and financial development on Renewable Energy Consumption in middle-income nations: Does FDI act as a boosting factor? Evidence from CS-ARDl and NARDL framework

The association between foreign direct investment (FDI), gross capital formation (GCF), financial development, and renewable energy usage is investigated in this research (REC). The research used the CS-ARDL and NARDL estimates to examine the correlation among REC, FDI, GCF, and financial development. The results demonstrate a strong and statistically valid positive correlation in both the immediate and prolonged periods. Whether innovation in FDI is favourable or bad, it may ultimately affect REC, either by accelerating or diminishing it. Additionally, the research emphasizes a substantial and statistically valid association between REC and GCF, demonstrating that domestic capital creation has a favourable effect on the incorporation of clean energy. Furthermore, the data demonstrates a noteworthy association between financial development and renewable energy certificates (RECs), suggesting that the financial incentivizes facilitated by financial development play a pivotal role in encouraging the widespread use of REC. The results shown in this research are consistent with prior scholarly works and have substantial ramifications for comprehending the intricate interplay of sustainable energy, foreign direct investment (FDI), gross capital formation (GCF), and financial growth. However, the research emphasizes the need to conduct a thorough assessment of the characteristics and quality of foreign direct investment (FDI) inflows. Furthermore, it emphasizes the need to promote equitable and sustainable development in the renewable energy industry while considering its impacts on society and the environment. In addition, the report highlights the possible social and environmental repercussions that may result from renewable energy initiatives sponsored locally. This underscores the importance of establishing resilient policy frameworks and efficient governance mechanisms to guarantee that financial development, foreign direct investment (FDI), and the Green Climate Fund (GCF) all contribute to fostering sustainable and equitable expansion in the utilization of renewable energy. As a result, the study's results provide significant contributions to the understanding of how to optimize the use of financial development, green climate funds (GCF), and foreign direct investment (FDI) in order to promote the adoption of renewable energy. But before formulating sustainable approaches to encourage the use of renewable energy, it is vital to do a thorough evaluation of the broader ramifications and associated variables.

Strategic Production and Trading in Renewable Energy Certificate Markets: Existence, Uniqueness, and Efficiency of Market Equilibria

As an incentive policy to promote renewable generation, the renewable standard portfolio (RPS) scheme has been widely adopted to enforce utility companies to procure a certain fraction of their energy supply from renewable sources. We construct a non-cooperative game theoretic model to study the strategic behavior of utility companies in a renewable energy certificate (REC) market, where utility companies purchase REC from renewable producers to meet their RPS obligation. In the constructed game, each utility company makes the renewable production decisions so as to minimize its total cost (the sum of renewable production and RPS penalty costs). We establish mild conditions that guarantee the existence of a Nash equilibrium. We further prove that if a Nash equilibrium exists, it must be unique and minimize the system cost. When symmetric utility companies' energy loads are independent and identical Gaussian distributed, as the number of utility companies increases to infinity, we show that the expected cost (of a utility company) converges to a lower bound, the product of the levelized cost of electricity (LCOE) of renewable generation and its expected RPS obligation. Numerical studies on real-world (load, RPS requirement, penalty, and LCOE) data show that the REC trading can reduce 5%-10% of the system cost.

A Decision Tree Approach to Develop Price Prediction Rules for Korea Allowance Unit and Renewable Energy Certificate

A Decision Tree Approach to Develop Price Prediction Rules for Korea Allowance Unit and Renewable Energy Certificate

Blockchain-enabled renewable energy certificate trading: A secure and privacy-preserving approach

In the 21st century, transitioning to renewable energy sources is imperative, with fossil fuel reserves depleting rapidly and recognizing critical environmental issues such as climate change, air pollution, water pollution, and habitat destruction. Embracing renewable energy is not only an environmental necessity but also a strategic move with multiple benefits. By shifting to renewable energy sources and supporting their production through the acquisition of renewable energy certificates, we foster innovation and drive economic growth in the renewable energy sector. This, in turn, reduces greenhouse gas emissions, aligning with global efforts to mitigate climate change. Additionally, renewable energy certificates ensure compliance with regulations that mandate the use of renewable energy, enhancing legal adherence while promoting transparency and trust in energy sourcing. To monitor the uptake of renewable energy, governments have implemented Renewable Energy Certificates (RECs) as a tracking mechanism for the production and consumption of renewable energy. They certify the generation of a specific amount of electricity from renewable sources, allowing for accurate tracking of renewable energy contributions to the overall energy mix. However, there are two main challenges to the existing REC schema: (1) The RECs have not been globally adopted due to inconsistent design; (2) The consumer privacy has not been well incorporated in the design of blockchain. In this study, we investigate the trading of RECs between suppliers and consumers using the directed acyclic graph (DAG) blockchain system and introduce a trading schema to help protect consumer information. The DAG system reduces the intense calculation of typical blockchains for scalability and lowers mining fees by eliminating the mining of blocks. The proposed approach allows renewable energy suppliers and consumers to trade RECs globally and to take advantage of secure trading transactions. Our results demonstrate lower transaction time by 41% and energy consumption by 65% compared to proof-of-stake.

Cleaner Chips: Decarbonization in Semiconductor Manufacturing

The growth of the information and communication technology sector has vastly accelerated in recent decades because of advancements in digitalization and Artificial Intelligence (AI). Scope 1, 2, and 3 greenhouse gas emissions data of the top six semiconductor manufacturing companies (Samsung Electronics, Taiwan Semiconductor Manufacturing Corporation, Micron, SK Hynix, Kioxia, and Intel) were gathered from the publicly accessible Carbon Disclosure Project’s (CDP) website for 2020. Scope 3 emissions had the largest share in total annual emissions with an average share of 52%, followed by Scope 2 (32%) and Scope 1 (16%). Because of the absence of a standardized methodology for Scope 3 emissions estimation, each company used different methodologies that resulted in differences in emissions values. An analysis of the CDP reporting data did not reveal information on strategies implemented by companies to reduce Scope 3 emissions. The use of renewable energy certificates had the largest effect on decarbonization centered on reducing Scope 2 emissions, followed by the deployment of perfluorocarbon reduction technologies to help reduce Scope 1 fugitive emissions. Technology-specific marginal abatement costs of CO2 were also estimated and varied between −416 and 12,215 USD/t CO2 eq., which primarily varied depending on the technology deployed.

A Decomposition Analysis of the Energy System Patent with Blockchain Technology

The energy blockchain is a platform based on blockchain technology, creating a secure, transparent, and decentralized system for peer-to-peer transactions and automated smart contracts. This platform has the ability to facilitate the exchange and management of energy resources, such as electricity or renewable energy certificates. Our research aims to clarify the growth trends of energy systems with blockchain technology throughout the world. The novelty of this study is to understand the main factor in energy blockchain patent granting using a patent decomposition analysis and log mean Divisia index analysis and discover the relative importance in the R&D shift from electricity to other technology. Additionally, the IPC for energy blockchain technology primarily focuses on configuring and managing energy systems, including electricity, gas, and water supply. We also present a comprehensive overview of how countries and companies engage with energy blockchain technology and find China leads with 59% of patents, followed by the U.S. with 20%, but their specific tech shares differ. Participants span beyond traditional energy sectors, including electric and electronic machinery, IT firms, transport manufacturers, startups, and universities dedicated to blockchain technology.

Turkey's national renewable energy certificate system: a comparative assessment

Turkey's national renewable energy certificate system: a comparative assessment

Blockchain-Based Renewable Energy Certificate Trade for Low-Carbon Community of Active Energy Agents

The future distribution grid is a peer-to-peer (P2P) community formed by a large number of active energy agents (AEAs), and renewable energy certificate (REC) trading is an efficient way to realize a low-carbon AEA community. AEAs can trade not only electricity but also RECs among themselves to economically and efficiently meet the renewable portfolio standard (RPS) requirements. Aiming to lower the market barrier and increase the trading benefits for market participants, this paper proposes a blockchain-based renewable energy certificate (BCREC) that supports divisible and multiple transactions. The trade process includes four stages: setup, pre-transaction, transaction, and post-transaction. A scheme based on blockchain oracles and smart contracts is implemented to achieve decentralized BCREC issuance and transaction and to support a more flexible trading market. By exploring two typical market scenarios, we verify the advantages of BCREC trading and evaluate its impacts on AEA profits and market efficiency.

Renewable energy certificates and firm value: Empirical evidence in Taiwan

The Renewable Energy Certificate (REC) has been considered as an innovative technology for a green society. Many firms look to reduce carbon emissions and improve their environmental, social, and governance (ESG) performance using RECs. However, the impact of REC purchases on the value of firms remains unclear. This study investigates the effect of REC purchases on the stock return and volume of all REC buyers in Taiwan between 2017 and 2021. The sample consists of 266 REC transactions in the trading market. We find a positive effect of firms’ REC purchases on its stock returns in manufacturing but not the service industry. Moreover, the frequency of REC purchases is an important factor in the relationship between REC purchase and firm value. This study also investigates the underlying mechanisms of these effects. We find that public attention paid to environmental pollution is the most crucial factor associated with positive stock return and volume of a firm, while ESG disclosure is negatively associated with returns and volume.

Green blockchain – A move towards sustainability

In recent years, blockchain technology has seen significant growth and widespread adoption in various industries. However, one major drawback of blockchain investments is their substantial energy consumption, which has negative impacts on both the economy and the environment. The main cause of concern is the generation of atmospheric carbon emissions resulting from excessive energy usage. This research study aims to identify blockchain networks and systems that assert themselves as environmentally friendly and determine which of them produces the least amount of carbon emissions, such as Cardano, Tezos, and Bitgreen. This has been accomplished by following a comprehensive hybrid literature review. Our study has identified 23 blockchain networks that consume significantly less power and release fewer carbon dioxide emissions compared to the Bitcoin network. Some of these environmentally friendly networks include Algorand, Fantom, MobileCoin, and Electroneum. Additionally, we have found various projects and organizations that support greener blockchain initiatives, such as the Renewable Energy Certificate Mechanism, Green Digital Finance Alliance, GreenTrust, and the Energy Web Foundation. While several projects in this area have been recognized and examined, comprehensive research and analysis are still needed to provide empirical evidence regarding the power consumption and carbon dioxide emissions of these claimed environmentally friendly blockchains. This is due to the relatively early stage of development in this field.

The relative importance of carbon markets to the waste management sector’s future contribution to climate change commitments under the Paris Agreement: insights from Australia

This paper presents research that analyses the relative importance of carbon markets to sustainable waste management projects in Australia. It identifies that a large proportion of carbon credits issued have been generated by landfill to electricity projects, which effectively rely on the continuation of landfilling practices. More ambition is needed to realise the potential of circular solutions that reduce, recover and utilise waste before disposal.The research also shows that, through modelling the financial performance of two theoretical waste to energy projects that would result in diversion of waste from landfill, simultaneous use of revenue support mechanisms (carbon markets and renewable energy certificate programs), cost of capital support programs (like concessional finance) and avoided landfilling levies in the deployment of waste management projects can be justified. The paper illustrates the significant contribution carbon revenues can make to project additionality at the investment-decision stage, adding between 2–10% to ex-ante estimates of pre-tax equity returns. This shows that a project’s additionality is not invalidated in cases where it accesses more than one support mechanism.There are many policy and practice applications for these findings in Australia and globally. They include within ongoing international efforts to define modalities for the new Article 6.4 mechanism under the Paris Agreement, reforms to how developing countries access to climate finance (including, but not limited to, the Bridgetown Initiative 2.0 (The Bridgetown Initiative 2.0: https://www.un.org/sustainabledevelopment/blog/2023/04/press-release-with-clock-ticking-for-the-sdgs-un-chief-and-barbados-prime-minister-call-for-urgent-action-to-transform-broken-global-financial-system/)); and through the domestic policies and mechanisms countries adopt so they are fit-for-purpose to support implementation of Nationally Determined Contributions (NDC).

Leveraging self-sovereign identity & distributed ledger technology in renewable energy certificate ecosystems

Renewable Energy Certificates (RECs) are tradable units that represent the commodity in the form of environmental attributes generated for each unit of electricity produced by a renewable energy source. Furthermore, the energy sector's digitalization ushers in new crucial enablers like Distributed Ledger Technology (DLT), which may be used for REC record tracking and trading. Unfortunately, there are a number of outstanding issues such as the lack of a common standard for the representation, communication, and verification of REC, reliance on centralized entities, and others. In order to harness the true potential of energy DLT and REC, it is imperative to address these issues. In this visionary article, we propose a holistic approach which leverages a novel decentralized identity mechanism called Self-sovereign Identity (SSI) and DLT. We present its architecture, based on a rigorous threat model and requirement analysis as well as detailed use-cases to illustrate how the architecture can be used in different REC use-cases.

Blockchain-Based Microgrid for Safe and Reliable Power Generation and Distribution: A Case Study of Saudi Arabia

Energy demand is increasing rapidly due to rapid growth and industrialization. It is becoming more and more complex to manage generation and distribution due to the diversification of energy sources to minimize carbon emissions. Smart grids manage reliable power generation and distribution efficiently and cater to a large geographical area and population, but their centralized structure makes them vulnerable. Cybersecurity threats have become a significant concern with these systems’ increasing complexity and connectivity. Further transmission losses and its vulnerability to the single point of failure (SPOF) are also major concerns. Microgrids are becoming an alternative to large, centralized smart grids that can be managed locally with fewer user bases and are safe from SPOF. Microgrids cater to small geographical areas and populations that can be easily managed at the local level and utilized for different sources of energy, like renewable energy. A small group of consumers and producers are involved, but microgrids can also be connected with smart grids if required to exchange the excess energy. Still, these are also vulnerable to cybersecurity threats, as in the case of smart grids, and lack trust due to their decentralized nature without any trusted third party. Blockchain (BC) technology can address the trust and cybersecurity challenges in the energy sector. This article proposes a framework for implementing a BC-based microgrid system for managing all the aspects of a microgrid system, including peer-to-peer (P2P) energy trading, Renewable Energy Certificate (REC), and decentralized energy trading, that can be utilized in the case of Saudi Arabia. It can integrate cybersecurity standards and protocols, as well as the utilization of smart contracts, for more secure and reliable energy generation and distribution with transparency.

Failure of India's Renewable Energy Certificate (REC) Mechanism as a Climate Finance Policy

As one of the world's largest economies and a developing nation with significant vulnerabilities to a changing climate, India has taken efforts to address climate change through various policies and initiatives. Climate finance policies play a crucial role in supporting developing countries in their transition to low‐carbon and climate‐resilient pathways. However, despite India's commitment to climate action, there have been instances where certain climate finance policies have failed to achieve their intended objectives. This article examines the failure of a specific climate finance policy in India and analyses the factors contributing to its shortcomings.