News 07 December 2016 News from SKAO
Green energy according to the CO2 Performance Ladder
Using green energy is a relatively simple way to reduce a companys CO2 emissions. Many companies therefore opt for this measure. The CO2 Performance Ladder imposes strict demands on what constitutes "green energy", please see Handbook 3.0 for more information. In the questions below, we will provide a brief explanation on what the ladder perceives green energy to be and we expand on key terms.
What is green energy according to the CO2 Performance Ladder?
Green energy refers to wind, hydro or biomass- generated electricity. The ladder emphasises two aspects regarding green energy: additionality and demonstrability with Guarantees of Origin
Additionality
The ladder expects the procurement of green energy to actually lead to the production of green energy. This is what ladder jargon refers to as additionality, meaning that the procurement of green energy by a company leads to more green energy production capacity. This then ensures the green energy market is being stimulated.
Demonstrable with Guarantees of Origin
All green energy sources are given certificates to demonstrate they produce green energy. A certificate is issued for each produced MWh of renewable electricity, a Guarantee of Origin. The ladder wants you to demonstrate that your green energy is exactly that. Green energy. These Guarantees prove this, and they are issued by CertiQ.
Can I use green energy from abroad for the CO2 Performance Ladder?
In short, no. The reason is that, in practice, the procurement of foreign green energy Guarantees do not lead to an increased production of green energy.
For example, lets look at Norway. A country with strictly green energy, owing in part to their large hydroelectric plants. Not a single Norwegian is thus interested in a green energy Guarantee of Origin, as everyone there uses green energy. A number of Dutch energy companies purchase the Guarantees from Norway for a negligible amount, selling it in the Netherlands as green energy. In practice, the purchase of this energy by companies does not lead to an extra production of green energy. Not in the Netherlands, and not in the country of origin.
In theory, this problem is solved by ensuring that the Norwegian green energy Guarantees of Origin are given a fixed price. The logical way to do this is to link the Guarantees to a countrys sustainable energy commitment. This means, that, if a green energy Guarantee for Norwegian energy leaves the country, for instance because it was sold to the Netherlands, this will be deducted from the sustainable energy production in Norway. And if this energy is used in the Netherlands, it gets added to the Dutch sustainable energy production. After all, the energy is used in the Netherlands, so its a fair trade.
With this link, the selling of green energy Guarantees from Norway to the Netherlands could result in Norway having to produce additional green energy to meet its commitment (and the Dutch less so) for additionality purposes.
Based on this reasoning, we have included requirement 3.2 in Handbook 3.0:
"3.2 the energy is imported from a EU member state or another country that has signed a EU sustainable energy objective with the European Commission.
In all cases pursuant to 3.2, it must be demonstrated that the exporting country, as part of the EU sustainable energy guideline, deducts the emission reduction in its reports to the European Commission as a result of the exported electricity (as it doesnt count)."
We hereby show that we not fundamentally against import, but that we stick with our additionality principle.
Why are the requirements so strict?
The idea behind the CO2 Performance Ladder is to reduce CO2 together. By making sure that certified organisations only procure green energy that stimulates the production of green energy, we will see a larger market for green energy. After all, a higher demand means higher production. And this will decrease CO2 emissions.
As we explained at the previous questions, we can presently only demonstrate this additionality with green energy Guarantees from the Netherlands.
How flexible is requirement 3.2 from Handbook 3.0 of the CO2 Performance Ladder?
The reality is that, in the EU, the system of green energy certificates is at present not linked to the sustainable energy commitment of countries, see the explanation at question 2. Discussion about this link resurfaces regularly because in practice, one country can relatively easily meet its commitment and produce more green energy, while another country struggles.
This means that foreign green energy Guarantees are as of yet no proof that the procurement of green energy by a company leads to more production capacity of green energy.
If there is a specific case where you expect to be unable to adhere to the above, please contact SKAO (via [email protected] or 0307116800).
As soon as this situation changes, SKAO will issue extensive communications and adjust the Handbook.