The interaction of tradable instruments in renewable energy and climate change markets: Final report

In order to meet renewable energy targets, establishing a market for tradable green certificates (TGC) is a relevant instrument to use. Within the past few years green certificate markets have gained extensive interest in Europe and elsewhere, and markets seem to be appearing in a number of countries, among these the UK, Australia, Italy, Belgium (Flanders), Sweden and Denmark. The main objective of the InTraCert project is to examine the potential and implications of establishing such an international tradable green certificate system with respect to the European Union (EU) and national renewable energy policies as well as climate change policies. Particular attention is paid to: the possibilities for establishing an EU-wide market for tradable green certificates to promote an efficient deployment of renewables across the borders of the Member States, to expand the TGC market to include not only renewable power production, but also the production of biogas and green heat, to analyse the interactions between TGC and other market instruments of the EU and Member States, especially tradable emission permits (TEP) for the power industry, to investigate interactions and implications for national and EU GHG (greenhouse gases) reduction policies, to clarify potential market distortions, trade-offs and other implications for renewable and GHG reduction policies if the TGC and TEP-systems are not designed appropriately. Analyses were performed for approaching optimal designs of TGC systems, including implications of different national systems with regard to penalties, tradability and system boundaries, aiming at guidelines for establishing a common EU TGC system. A number of scenarios outlines the possible interactions between the TGC-approach and tradable emission permits and the implications for applying these instruments in reaching national GHG reduction targets. One of the major outcomes of the project is a comprehensive list of policy recommendations for implementing trading systems for renewable energy and GHG emissions at the EU and/or at the national level