Tradable Certificates Research Articles

Prices versus quantities: choosing policies for promoting the development of renewable energy

Now that the risks of climate change have been confirmed and the European States have declared their willingness to pursue ambitious objectives for producing electricity from renewable energy sources, it becomes crucial to take a look at the relative efficiency of the different incentive schemes used. Such schemes may focus on quantities—defining national targets and setting up bidding systems, or quota systems providing for green certificate trading—, or they may focus on prices—feed-in tariffs. Clearly, these instruments are much the same as those used in environmental policies, with similar discussion involved in their choice. Whatever the system chosen, the role of the public authorities is quite specific: to stimulate technical progress and speed up the technological learning processes so that ultimately renewable energy technologies will be able to compete with conventional technologies, once the environmental costs have been internalised. A comparison of instruments must thus take into account the characteristics of the innovation process and adoption conditions—uncertainties regarding cost curves, learning effects—which means also looking at dynamic efficiency criteria. The authors examine the efficiency of the different incentive schemes for the development of renewable energy sources, both from a theoretical point of view by comparing price-based approaches with quantity-based approaches, and from a practical point of view by looking at concrete examples of how these different instruments have been implemented. The paper concludes that a system of feed-in tariffs is more efficient than a bidding system, but highlights the theoretical interest of green certificate trading which must be confirmed through practice, given the influence of market structures and rules on the performance of this type of approach.

Interactions of a tradable green certificate market with a tradable permits market

Abstract The reduction of greenhouse gas (GHG) emissions is an important goal in the energy and environmental policies of the European Union (EU) and its member states. According to a recent directive-proposal from the EU-commission, the inclusion of renewable technologies is one of the important ways to achieve this emission reduction. More policy instruments are on hand to pursue this objective. Frequently discussed currently is the establishing of a market for tradable permits for CO2-emissions to achieve emission reductions in the power industry. In parallel with this is the introduction of a green certificate market to promote the development of renewables. If these two instruments are brought into play at the same time, two separate markets with two individual targets will co-exist in a number of countries. With a focus on the green certificate market, this paper discusses how these two markets may interact with each other in international trade. Three different cases are analysed: (1) A green certificate market without any tradable permits scheme, (2) a green certificate market in combination with a tradable permits scheme, based on grandfathering and, finally, (3) a green certificate market in combination with a tradable permits bidding scheme. Emphasis is placed on analysing the pricing mechanisms in international trade at the green certificate and tradable permits market in relation to the value of the reductions in GHG-emissions actually achieved. The influence of the permits scheme on the spot market price of electricity is shown, and the benefits of trading green certificates compared to a domestic implementation of renewable technologies are discussed. The main conclusion is that only if a green certificate market is combined with a tradable permit scheme based on a bidding procedure will trade in certificates be equivalent to the domestic development of renewables. Using the bidding system no other country will have to pay for CO2-reductions in the home country of the renewable development, as would otherwise be the case if a tradable permit system based on grandfathering were introduced or – even worse – if no tradable permits were introduced at all. Finally, it must be stated that even if the green certificate market were introduced alongside with a tradable permit bidding system, there still would be no incentives for international certificate trade on account of the need for GHG-reductions. In the version of the green certificate market discussed in this paper no GHG-credits are attached to certificates. This means that the development of renewables will add to GHG-reductions only in those countries, where the plants are established, no matter what kind of tradable permit scheme is adopted.

Interactions between the power and green certificate markets

The current trend of liberalising the power markets is combined with ambitious deployment plans for power production based on renewable energy supplies. A new policy scheme to ensure this extension has been developed in the form of a green certificate system, with a politically determined target of deployment. In such a system, producers of renewably based electricity receive tradable certificates in proportion to the electricity they produce. The producer can thereby sell these certificates and receive additional revenue apart from the power price. This paper studies the price and consumption effects of such a system. With a simple model we show that the effects are ambiguous. This ambiguity is caused by the interaction between the two markets. Therefore, the green certificate system is difficult to manage if the State has parallel energy targets, such as a desired deployment of renewably based energy and a stabilisation or reduction of the energy consumption. In addition, this complicates the regulation through a deployment target of renewably based power production, as the regulator has to be aware of the different effects, which follow a specific target. Until now, these effects have not been considered in the analyses of the green certificate system when introducing the system, even though it might have considerable consequences for the success of the system.

Ökologische Steuerreform: Im Schacher um die Ökosteuer sind sich zu viele nicht grün

The excellent idea of a revenue-neutral energy tax has been badly implemented by the "red-green" Federal Government of Germany. A reform is urgently required. The tax income collected from households shall be repaid in equal amounts per cent to them ("Eco-Bonus") For industry and commerce a CO2-emission certificate trading shall be installed.

Wind energy in China: policy options for development

China's wind energy potential ranks highly in the world scale. In the key wind energy regions, there is potential to develop a succession of large wind-farms of up to several hundreds of MW capacity. In the '90s the government target of 1 GW for the wind-power capacity to be installed by the year 2000 was lowered to 620 MW. In 1994, three government bodies, the then State Planning Commission, the State Science and Technology Commission, and the State Economic and Trade Commission, created the long-term Development Programme for Renewable Energies for the years 1996–2010. In 1996, the new Electricity Law of the PRC, declared “… the State encourages and supports electricity generation by using renewable and clean energy resources”. However, key energy objectives of China's Ninth Five Year Plan (1996–2000) reflected the continuing dominance of coal, oil and gas in China's energy policy-making. Between 1993 and 1997, wind generating capacity installed in China had risen from 17.1 to only 167 MW, while capital and operating costs for wind generated electricity (1998) were still too high in relation to coal and hydro generation. The 10th-Five Year Plan aims to promote more environment-friendly power generation including hydropower development in the western region. The plan will allocate more natural gas and renewable energy for power generation. With no value being ascribed to inherent cleanliness of wind energy, electricity produced from this relatively immature sector continues to need higher prices than that from entrenched, mature fossil-fuel-based power generation. In China this has contributed to a perception that wind is a niche-market resource, primarily relevant to remote rural areas which conventional power grids are not able to reach economically. Expansion of wind energy to a larger role runs into opposition from newly liberalised power networks who are more than ever concerned, and required, to keep the cost of supplies as low as possible. Within these limitations, some success has been and still is being achieved in buying down the costs through technical and scalar innovation in a growing number of grant-aided projects. For greater penetration to be achieved, a market needs to be created for wind energy. There is recent evidence in Europe and the United States that realistic incentives can encourage industry to consider much larger wind-power development projects with consequent improvement to the economics. Competitive bidding from wind-energy development companies can ensure that the targets are met at lower cost. A system of competitive bidding for licence areas (or concessions) for areas big enough to support very large wind-power plants, and chosen from prime wind regions by government, can be issued, regularly for bidding, as in oil and gas development. An accompanying institutional framework such as the renewable portfolio standard (RPS) is essential. China is considering introducing a trial mandated market share (MMS) intervention, based on RPS for a selected region to assess its applicability to both China nationally and the renewable energy sector as a whole. There is a case for enactment of an encompassing Renewable Energy Law, which will provide a point focus for regulating renewable energy development, setting any RPS/MMS levels within time-frames and with all related modalities, including green certificate trading. An electricity price in the region of 4.5–5.0 USC/kWh will also need to be achieved when power purchase agreements are negotiated, if the bidding process is to achieve success. Local production of hardware needs to lower capital costs by an estimated 25–30% of current (2000) costs if economic returns are to be sufficient at these price levels. A concessionary approach, linked with a renewable portfolio standard law and aimed at large projects, can help achieve a faster development and a rapid buy-down of costs of wind energy technology.

Renewables portfolio standard: a means for trade with electricity from renewable energy sources?

This paper discusses the main support mechanisms for enhancing the deployment of renewable energies (RE) implemented in different industrialised countries. The focus is on the electricity sector, where deregulation and liberalisation has led to market opening and introduction of competition in the formerly strongly regulated power market. Under open market conditions, price regulation mechanisms in favour of renewable energies, which were used by many governments to support renewables tend to be considered as being inappropriate, because they lead to distortions in competition and are difficult to abolish once market participants got used to them. Therefore, the idea of creating a demand for RE instead of supporting supply is gradually spreading. This paper concentrates on the Renewables Portfolio Standard (RPS), which is a considerably new instrument that is aimed on the demand side and has only recently entered discussion. It is based on legislatively mandating a percentage share of electricity generated from renewables and proved with certificates. Before this new means is discussed in more detail, a short overview of the existing supply side mechanism is given, to point out the different approach. In addition, examples of some countries already having some experience with the RPS are given, to show the present status of implementation. Derived from these theoretical considerations and practical experiences, the paper discusses possible impacts on market participants. They depend strongly on the outline of the RPS and the organisation of the electricity sector adopted. As a conclusion, the introduction of an RPS cannot alone solve the problem of enhancing the use of RE. However, the advantages are a higher degree of competition among generators or developers of RE technology, more freedom of choice concerning the options for meeting the requirement and perhaps less government expenditures. Also, experiences with national certificate trading within the RPS system could ease the way for international, or at least European, trading systems like the emissions trading as proposed in the Kyoto protocol.

Interactions of a tradable green certificate market with a tradable permits market

The reduction of greenhouse gas (GHG) emissions is an important goal in the energy and environmental policies of the European Union (EU) and its member states. According to a recent directive-proposal from the EU-commission, the inclusion of renewable technologies is one of the important ways to achieve this emission reduction. More policy instruments are on hand to pursue this objective. Frequently discussed currently is the establishing of a market for tradable permits for CO 2-emissions to achieve emission reductions in the power industry. In parallel with this is the introduction of a green certificate market to promote the development of renewables. If these two instruments are brought into play at the same time, two separate markets with two individual targets will co-exist in a number of countries. With a focus on the green certificate market, this paper discusses how these two markets may interact with each other in international trade. Three different cases are analysed: (1) A green certificate market without any tradable permits scheme, (2) a green certificate market in combination with a tradable permits scheme, based on grandfathering and, finally, (3) a green certificate market in combination with a tradable permits bidding scheme. Emphasis is placed on analysing the pricing mechanisms in international trade at the green certificate and tradable permits market in relation to the value of the reductions in GHG-emissions actually achieved. The influence of the permits scheme on the spot market price of electricity is shown, and the benefits of trading green certificates compared to a domestic implementation of renewable technologies are discussed. The main conclusion is that only if a green certificate market is combined with a tradable permit scheme based on a bidding procedure will trade in certificates be equivalent to the domestic development of renewables. Using the bidding system no other country will have to pay for CO 2-reductions in the home country of the renewable development, as would otherwise be the case if a tradable permit system based on grandfathering were introduced or – even worse – if no tradable permits were introduced at all. Finally, it must be stated that even if the green certificate market were introduced alongside with a tradable permit bidding system, there still would be no incentives for international certificate trade on account of the need for GHG-reductions. In the version of the green certificate market discussed in this paper no GHG-credits are attached to certificates. This means that the development of renewables will add to GHG-reductions only in those countries, where the plants are established, no matter what kind of tradable permit scheme is adopted.

Tradable CO 2 permits for cars and trucks

The accelerated diffusion of cleaner vehicles to reduce CO 2 emissions in transport can be explicitly integrated in emission trading designs by making use of cross-sectoral energy efficiency investment opportunities that are found in data on CO 2 emissions during the production and the use of cars and trucks. We therefore elaborate the introduction of tradable certificates that are allocated or grandfathered to manufacturers that provide vehicles (and other durable goods) that enable their customers to reduce their own CO 2 emissions. This certificate is an allowance for each tonne CO 2 avoided. Manufacturers can then sell these certificates on the emission market and use the revenues to lower the price of their cleanest vehicles. This mechanism should partially overcome the price difference with less efficient cars. In a simulation, we found that the introduction of the certificate in tradable permit systems can lead to very significant reductions of CO 2 emissions. The simulations indicate that CO 2 emissions resulting from the car fleet can be reduced by 25–38% over a period of 15 years (starting in 1999). For the truck fleet, the reduction potential is more limited but still very interesting.

Overview of government and market driven programs for the promotion of renewable power generation

This paper presents and briefly evaluates some existing government instruments and market schemes which support the development of renewable energy generation. The brief evaluation focuses on the incentives provided by the various instruments to reduce production costs. The instruments and schemes are: feed-in tariffs, net metering, bidding process, fixed quotas, green certificate trading, green power exchange, green pricing.

Scenarios for the Use of Ghg-Reduction Instruments – How Can Policy-Instruments as Carbon Emission Trading and Tradable Green Certificates Be Used Simultaneously to Reach a Common Ghg-Reduction Target?

According to the agreed burden sharing in the EU, a number of member states have to reduce their emissions of greenhouse gases substantially. To achieve these reductions various policy-instruments – national as well as international – are on hand. Two international instruments are emphasized in this paper: tradable quotas for limiting carbon emissions and tradable green certificates for promoting the deployment of renewable energy technologies. In the analyses of these two instruments two main questions are considered: 1) Will there be any international trade in green certificates, if no GHG-credits are attached to them? 2) Will it make any difference if the EU sets the targets to be achieved by the two instruments or alternatively the individual member countries do? An incentive-analysis in which four scenarios are set up and discussed is performed for the EU member states. The main conclusion is that if no GHG-credits are attached to the green certificates there seems to be limited or no incentives for a permanent international trade in certificates. On the other hand, if GHG-credits are attached to the certificates an efficient international trade will take place regardless of whether the EU or the member countries fix the quotas. Thus, the use of international instruments as tradable green certificates and tradable emissions permits will not lead to an optimal GHG-reduction strategy unless GHG-credits are attached to the certificates.

The diffusion of cleaner vehicles in CO 2 emission trading designs

The accelerated diffusion of cleaner vehicles to reduce CO 2 emissions in transport can be explicitly integrated in emission trading designs by making use of cross-sectoral energy efficiency investment opportunities that are found in data on CO 2 emissions during the production and the use of cars and trucks. We therefore elaborate the introduction of tradable certificates that are allocated or grandfathered to manufacturers that provide vehicles (and other durable goods) that enable their customers to reduce their own CO 2 emissions. This certificate is an allowance for each tonne CO 2 avoided. Manufacturers can then sell these certificates on the emission market and use the revenues to lower the price of their cleanest vehicles. This mechanism should partially overcome the price difference with less efficient cars. In a simulation, we found that the introduction of the certificate in tradable permit systems can lead to very significant reductions of CO 2 emissions. The simulations indicate that CO 2 emissions resulting from the car fleet can be reduced by 25 to 38% over a period of 15 years (starting in 1999). For the truck fleet, the reduction potential is more limited but still very interesting.

Long term nuclear power role under CO 2 emission constraint

Global environmental issue including climate change is one of the important factors to outlook the 21st century energy mix. Future greenhouse gases emissions trajectory, such as CO2 emissions, has close relationship with nuclear power scenario. Therefore, nuclear power options consideration including phase out and continuous operation should be assessed under international CO2 emissions constraint. Simulations concerning energy sector behavior were conducted and the relationship among nuclear power generation scenarios, carbon certificate trade and potential economy effects was obtained.

Analysis of Carbon Emission Stabilization Targets and Adaptation by Integrated Assessment Model

This paper proposes a new framework for integrated assessment models of global environmental issues, including energy, climate, land use, macroeconomics, and environmental impacts. We conducted simulations on carbon emission stabilization in regions specified at the Third Conference of the Parties to the United Nations Framework Conventions on Climate Change (UNFCCC/COP3). Adaptation strategies including technology choice, conservation and carbon emission certificate trade are evaluated. We find that carbon certificate trade is potentially effective in averaging relative impact in macroeconomic activity.

Equity in outgoing tourism through tourist certificates

The author addresses the unequal participation of different nations in outgoing tourism as an ethical question and proposes a tourist certificate trading programme. Today 65 per cent of the total tourism expenditure belongs to the top ten tourism outgoing countries that only have 15 per cent of the world population. The tourist emission trading programme would provide governments with an efficient tool for obtaining equity in trans‐boundary tourism consumption by giving financial compensation for not travelling. Travellers would have to hold tourism permits equal to the value of their travel consumption units. If they proved insufficient they would have to buy permits from other participants that travel less. Non‐travellers would be compensated for not travelling, the third world nations would gain financial sources due to their lower travel propensity on the account of western countries with a higher propensity to travel. Since tourism uses and destroys the environment and grows constantly, such a programme would enable the control of the growth of tourism too ‐ by limiting the total number of certificates.

Robust asset prices with bubbles

We generally establish equilibrium asset prices than can include price bubbles yet (a) be robust to truncations of the economy and (b) exclude trade in non-consumables, like money, stock certificates, or land deeds.

The macro quality assurance system for fire safety engineering

The comprehensive application of fire safety engineering in modern buildings makes the quality of fire safety equipment a very important aspect of the achievement of fire safety. With its direct relevance to the safety of human life and property, the quality of fire safety engineering in buildings is of concern not only to builders and their clients, but also to various social groups and organizations, ranging from government bodies and business organizations to the individual users of the buildings. Results of the recent research by the authors indicate that the government, insurers, quality certification bodies, building authorities, fire authorities, and trade and professional bodies significantly influence the development of quality assurance in the fire protection industry in the United Kingdom. In this article, the authors explore how these social groups and organizations play their roles in the development of a macro system for quality assurance in the fire protection industry in the U.K.

British Food Journal Volume 46 Issue 9 1944

British Food Journal Volume 46 Issue 9 1944