Green Certificates
Iceland's becoming a member of the single electricity market throughout Europe has provided new opportunities for Icelandic energy producers.
In recent years, the European Union (EU) has worked towards minimising greenhouse gas emissions, in order to comply with its commitments under the 1997 Kyoto Protocol. However, energy production in continental Europe is only to a small extent based on renewable energy sources. A new directive, RES-E (2001/77/EC), was introduced so as to encourage producing energy from renewable sources, or green energy. The directive sets the goals of EU member states for increasing their proportions of renewable energy sources. The aim is that by 2010, 21% of the electricity used within the extent of the EU will be green energy.
According to the directive, individual member states are free to decide their own means of encouraging electricity producers in adopting renewable energy sources to a greater degree. The member states accordingly apply various measures for achieving the established goals, one of which is trade in green certificates.
Energy production using renewable sources is divided into two components – the electricity itself and its green attributes, or green value. Both of these two components count as commodities, with green certificates confirming the green value of electricity that has been generated from renewable energy sources.
Green certificates provide a guarantee of origin, enabling electricity producers that rely largely on renewable energy sources to sell green credits for their product in the internal European market. These are purchased by other producers in the internal market who wish to increase the ratio of green value in their energy production by buying more green credits. Trading green certificates is already possible in a number of EU states.
Since green certificate sales are regulated by each member state, the terms and conditions vary widely between states.
There are three main types of green certificates:
- Certificates sold to fulfil legal requirements on green generation ratios.
- Certificates sold to meet national objectives according to the RES directive.
- Certificates sold to increase the visibility of green production in the accounts of individual electricity producers, with no reference to legal requirements or quotas. This market is based on purchasers opting for a corresponding improvement of their image. The buyer can utilise such credits in promotions, thereby creating a greener image, in addition to supporting green energy production within the internal market.
Each certificate is issued for 1 MWh.
Landsvirkjun has sold green certificates to electricity producers in EU member states who subsequently use them to confirm green production sources in the internal market and thus elevate their own image.
Landsvirkjun has received a certification of origin for its green credits from the German certifier TÜV SÜD. The company‘s contact person for green certificates is Unnur María Þorvaldsdóttir (Tel.: +354 515 9252).