The lack of an adequate regulatory framework is particularly felt by the international market for renewable energy. Current cross border trade volumes are substantial and there are many drivers for this. The most important drivers at the moment are the voluntary market, the demand for disclosure, and national support measures. Integration of regulations regarding these three major drivers is required as soon as possible.

Regarding the voluntary market, only the Dutch government acknowledged the necessity to regulate the use of Guarantees of Origin, in order to protect the consumer and to avoid double selling. In all other countries double selling and double counting could occur. Here the Commission should step in and take the initiative to guarantee the proof of green offerings in all member states. Without this coordination, cross border trade leads to substantial chaos in the renewable energy market.

The second driver for international green energy trade is the demand for disclosure of information about the supplier’s energy mix, which is regulated under the general electricity directive. But clearly there is no connection with the guarantees of origin which are regulated under another Directive for renewable power. Regarding disclosure, experiences up to now have shown double counting of renewable energy on a large scale. Only few EU countries (Austria, the Netherlands, Germany) are working with disclosure on the basis of redemption of the Guarantee of Origin; other countries are acting on the basis of statistics. Most of the volumes that are exported to Austria and the Netherlands, are double counted. Once consumers realise this, they will lose confidence in the renewable energy policy of the national governments.

Support systems are the third driver for cross border trade. Because of the large differences between national support systems, market players will look for the best country to export their green electricity to. This perfectly matches the idea of an internal EU market. However, presently most governments exclude imported electricity from the benefits from their supports systems.The Commission allows these market barriers on the basis of the state aid rules. But most of the support systems do not qualify under state aid rules, so market barriers are not according the internal market rules at all!

One could conclude that regulation for renewable energy is very inconsistent. A comparison with the European Emission Trading System shows that Europe can do much better. Within the ETS rules are designed using a top down approach with clear targets, national allocation plans and consequently clear targets for market players. Moreover, market conditions are well defined, with independent registries to exclude double counting.

In the case of renewable energy, clear boundaries are missing. Yet international trade does exist. This leads to a chaotic market and – in the end – to the threat of a loss of consumer confidence . The solution to the problem lies within an administrative system of certificates or Guarantees of Origin, which includes redemption of these certificates.

Peter Niermeijer

General Secretary

RECS International