Green certificate trading

Abstract

Policies to promote renewable electricity are increasingly seen as a way to reduce the negative environmental impacts associated with electricity consumption and meet growing electricity demand. This paper reviews the international experience with one such policy, namely, renewable energy certificates, and considers important design aspects of a national green certificate system. Within a South African context, a green certificate system would provide a mechanism with which to verify compliance with any future renewable energy obligations, and would encourage renewable electricity generation in the current monopoly environment. In terms of a national green certificate framework, international experience has shown that renewable energy certificates must be both accredited and standardized, with enforcement of penalties for non-compliance with renewable energy quotas. Above all, a long-term and stable policy environment is crucial for developing renewable energy markets.