Emissions trading and green certificate schemes - company actions and market interactions

Emerging renewable energy certificate schemes and Emissions Trading will give additional incentives for production and usage of bioenergy over the next decade and will thus benefit to actors in the bioenergy value chain. Generators of electricity from existing bioenergy installations have benefited from additional revenues provided by the adoption of renewable energy certificate schemes (often called green certificates ) in various Member States and Accession Countries of the European Union. Companies having installations within the European Emissions Trading Scheme (EU ETS) currently prepare themselves for the start of the scheme in 2005. Encountering new business opportunities, e.g. trading green certificates or emission allowances on respective markets, as well as compliance with quota obligation and quantitative emission obligation require strategic planning, risk management and action plans on company level. Companies need to determine the costs of reducing their greenhouse gas emissions, to acquire data on the markets for emission allowances, gain insights in the market functioning, and build capacity for actual trading of emission allowances. Green certificate systems and Emissions Trading may affect the price for biofuels where in the short-term perspective energy companies would start to use biofuels for co-firing or co-combustion in coal fired power plants across Europe. Both instruments will boost the development and implementation of new bioenergy projects and therefore open up new business opportunities for specialized technology providers. They can especially benefit from projects developed under the Clean Development Mechanism (CDM) and Joint Implementation (JI) mechanisms of the Kyoto Protocol, through which they may receive an additional income from the sales of emission reductions, thus enhancing the cash flow of the project and shortening the time of the return of the investment. (author)