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Electricity Generated from Renewable Sources and Emission Marketplaces

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Abstract

EU law has increased investment in the generation of electricity from renewable sources (RES-E). There are different kinds of promotion strategies for renewables. They can be (1) regulatory or voluntary and (2) direct or indirect. Moreover, they can address (3) price or quantity. They can also foster (4) investment or generation.

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Notes

  1. 1.

    Haas R et al. (2011), section 5.1.

  2. 2.

    See NASDAQ OMX, Trading Appendix 2/Clearing Appendix 2, Contract Specifications, Commodity Derivatives (24 November 2014), Part B, section 3.2.1.

  3. 3.

    Directive 2003/87/EC (EU Emissions Trading Scheme Directive). The second-largest cap-and-trade scheme in the world is California’s AB32. See, for example, Lo Schiavo G (2012) and Poncelet C (2011).

  4. 4.

    See, for example, Ollikka K (2013). For the Kyoto Protocol, see Korhola ER (2014), p. 91.

  5. 5.

    Sinn HW (2009); Ollikka K (2013), p. 290.

  6. 6.

    Article 7(2) of Directive 2009/72/EC (Third Electricity Directive). See points c, f, g, j, and k.

  7. 7.

    Article 15 of Directive 2009/28/EC (RES Directive).

  8. 8.

    Recital 39 and Article 14(10) of Directive 2012/27/EU (Energy Efficiency Directive).

  9. 9.

    Recital 52 of Directive 2009/28/EC (RES Directive).

  10. 10.

    The joint Swedish and Norwegian Electricity Certificate System came into force on 1 January 2012. It is based on: lag om elcertifikat (2011:1200) (the Swedish Electricity Certificates Act) and the Swedish Energy Agency’s regulations and general guidelines for certificates (STEMFS 2011:4); and lov om elsertifikater 24.06.2011 nr. 39 (Norwegian law on electricity certificates).

  11. 11.

    See Inwinkl P and Rosenberg J (2011) who discuss sanctions for fraud.

  12. 12.

    Chapter 4, section 1 of the Swedish Electricity Certificates Act.

  13. 13.

    Chapter 4, section 5 of the Swedish Electricity Certificates Act.

  14. 14.

    NASDAQ OMX, Trading Appendix 2/Clearing Appendix 2, Contract Specifications, Commodity Derivatives (24 November 2014), Part B, section 4.2.1: “… El-Cert or Electricity Certificates means any Electricity Certificate unit representing one (1) Electricity certificate issued for each (1) MWh of electricity produced from renewable energy sources”.

  15. 15.

    Kitzing L et al. (2012); Haas R et al. (2011), section 6; Ollikka K (2013).

  16. 16.

    § 2 and § 5(1) EEG 2012.

  17. 17.

    §§ 34–37 EEG 2012.

  18. 18.

    § 34 EEG 2012.

  19. 19.

    For example, Mihm A (2009).

  20. 20.

    Point 1 of § 19(1) EEG 2014 and § 2(2) EEG 2014.

  21. 21.

    Point 2 of § 19(1) EEG 2014.

  22. 22.

    § 34 EEG 2014; Annex 1 to EEG 2014.

  23. 23.

    §§ 37–38 EEG 2014.

  24. 24.

    § 20 EEG 2014.

  25. 25.

    See Haas R et al. (2011), section 6.3.

  26. 26.

    Haas R et al. (2011), section 6.3.

  27. 27.

    Monopolkommission (2013), section 3.3.3 and number 514. For a comparison of the UK model and the German model before EEG 2014, see Toke D (2010), p. 29.

  28. 28.

    See Haas R et al. (2011), section 6.3.4.

  29. 29.

    For auction mechanisms, see Ausubel LM and Cramton P (2011).

  30. 30.

    Haas R et al. (2011), section 6.2. For renewables obligations in the UK, see Otitoju A et al. (2010).

  31. 31.

    Article 16(2)(c) of Directive 2009/28/EC (RES Directive).

  32. 32.

    Article 16(2) of Directive 2009/28/EC (RES Directive). See also Articles 15(3) and 25(4) of Directive 2009/72/EC (Third Electricity Directive).

  33. 33.

    Article 15(4) of Directive 2009/72/EC (Third Electricity Directive).

  34. 34.

    Article 34 TFEU.

  35. 35.

    Case C-379/98 PreussenElektra v Schleswag [2001] ECR I-2099, paras 69–71.

  36. 36.

    Case C-379/98 PreussenElektra v Schleswag [2001] ECR I-2099, paras 72–73.

  37. 37.

    See Haas R et al. (2011), sections 6.4 and 6.5.

  38. 38.

    Article 12 of Directive 2009/72/EC (Third Electricity Directive).

  39. 39.

    Articles 3(3) and 25 of Directive 2009/72/EC (Third Electricity Directive).

  40. 40.

    Recital 36 and Article 12 of Directive 2009/72/EC (Third Electricity Directive). See also Articles 25, 32(1), 37(1), 37(6)(a), 37(8), and 37(10) of Directive 2009/72/EC (Third Electricity Directive).

  41. 41.

    First subparagraph of Article 16(3) of Directive 2009/28/EC (RES Directive). See also second subparagraph of Article 16(3) of Directive 2009/28/EC (RES Directive), and Article 14(1) of Regulation 714/2009 on conditions for access to the network for cross-border exchanges.

  42. 42.

    Article 16(4) of Directive 2009/28/EC (RES Directive).

  43. 43.

    SOU 2008:13, p. 200, Table 5-3.

  44. 44.

    § 17e EnWG. See also Bundesnetzagentur (2009).

  45. 45.

    What the heavy costs can mean in the worst case can be illustrated with the problems faced by TenneT TSO, a transmission system operator based in Germany and the Netherlands. Bundesnetzagentur, the German regulatory authority was reluctant to grant an authorization for Tennet TSO in the light of Tennet’s funding. See Bundesnetzagentur (2012). Failure to connect offshore wind farms to the grid can lead to liability for loss sustained by the wind farm operators. Tennet TSO settled one such case. See Windreich AG, Windreich und TenneT einigen sich auf Interimsanbindung für Offshore-Windpark Deutsche Bucht, press release (25 October 2012).

  46. 46.

    Frankfurter Allgemeine Zeitung, Stromverbraucher sollen für Netze vor der Küste haften, 25 August 2012, p. 9.

  47. 47.

    SOU 2008:13, pp. 200–203.

  48. 48.

    Point a of Article 12 of Directive 2009/72/EC (Third Electricity Directive).

  49. 49.

    Point b of Article 16(2) of Directive 2009/28/EC (RES Directive).

  50. 50.

    Point a of Article 16(2) of Directive 2009/28/EC (RES Directive).

  51. 51.

    In so far as the secure operation of the national electricity system permits. Point c of Article 16(2) of Directive 2009/28/EC (RES Directive).

  52. 52.

    Article 15(1) of Directive 2009/72/EC (Third Electricity Directive).

  53. 53.

    Article 15(3) of Directive 2009/72/EC (Third Electricity Directive). See also Article 16(11) of Directive 2009/28/EC (RES Directive).

  54. 54.

    Articles 16(7) and 16(8) of Directive 2009/28/EC (RES Directive).

  55. 55.

    Section 1251 of the Energy Policy Act of 2005.

  56. 56.

    Commission Recommendation of 9 March 2012 on preparations for the roll-out of smart metering systems (2012/148/EU), para 42. See also Thomas S (2001), p. 120: “The DGES, a strong advocate of metering as a way of allocating costs appropriately, reluctantly came to the conclusion in 1995 that ‘smart’ meters were not viable and that ‘profiling’, at that time being introduced in Norway, was the only viable solution”.

  57. 57.

    See, for example, Energy Markets Inspectorate (2011), section 7.3.10.

  58. 58.

    Point c of Article 9(2) of Directive 2012/27/EU (Electricity Efficiency Directive). See also point d.

  59. 59.

    Hedström L and Stridh B (2006). See, for example, recital 52 of Directive 2009/28/EC (RES Directive) and para 135 of Guidelines on State aid 2014–2020.

  60. 60.

    Hedström L and Stridh B (2006).

  61. 61.

    Bloomberg New Energy Finance, Vestas Wind Systems A/S, Global Corporate Renewable Index (CREX) 2012, section 2.2.

  62. 62.

    International Energy Agency (2007).

  63. 63.

    Directive 2003/87/EC (ETS Directive). See Roberts R and Staples C (2008).

  64. 64.

    Article 12(1) of Directive 2003/87/EC (ETS Directive).

  65. 65.

    Article 12(2) of Directive 2003/87/EC (ETS Directive).

  66. 66.

    Article 20(1) of Directive 2003/87/EC (ETS Directive).

  67. 67.

    Point a of Article 12(1) of Directive 2003/87/EC (ETS Directive).

  68. 68.

    Point b of Article 12(1) as well as Articles 25(1) and 25(2) of Directive 2003/87/EC (ETS Directive).

  69. 69.

    Directive 2004/101/EC amending Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading within the Community, in respect of the Kyoto Protocol’s project mechanisms.

  70. 70.

    Article 30(3) of Decision 406/2009/EC of the European Parliament and of the Council on the effort of Member States to reduce their greenhouse gas emissions to meet the Community’s greenhouse gas emission reduction commitments up to 2020.

  71. 71.

    Communication from the Commission, 20 20 by 2020 – Europe’s climate change opportunity, COM(2008) 13 final, COM(2008) 16 final, COM(2008) 17 final, COM(2008) 18 final, COM(2008) 19 final, COM(2008) 30 final. For the Kyoto Protocol, see, for example, Korhola ER (2014).

  72. 72.

    See NASDAQ OMX, Trading Appendix 2/Clearing Appendix 2, Contract Specifications, Commodity Derivatives (24 November 2014), Part B, section 3.2.1.

  73. 73.

    Article 5 of Decision 406/2009/EC of the European Parliament and of the Council on the effort of Member States to reduce their greenhouse gas emissions to meet the Community’s greenhouse gas emission reduction commitments up to 2020.

  74. 74.

    For an introduction, see, for example, Okinczyc S (2011) and Lo Schiavo G (2012).

  75. 75.

    Annex I to Directive 2003/87/EC (as amended by Directive 2009/29/EC).

  76. 76.

    Lanz M et al. (2011), section 4.2.1, pp. 88–89.

  77. 77.

    Articles 9–11 of Directive 2003/87/EC (ETS Directive).

  78. 78.

    The Economist, Complete Disaster in the Making. The world’s only global carbon market is in need of a radical overhaul (13 September 2012).

  79. 79.

    See, for example, Aatola P et al. (2013), p. 279.

  80. 80.

    See Lo Schiavo G (2012) and Okinczyc S (2011).

  81. 81.

    Phase III commenced on 1 January 2013 after the adoption of a revised EU ETS Directive (Directive 2009/29/EC). The Aviation Directive (Directive 2008/101/EC) had already added aviation as an additional sector to the EU ETS.

  82. 82.

    Recital 19 of Directive 2009/29/EC.

  83. 83.

    Recital 21 of Directive 2009/29/EC and Article 10a (11) of Directive 2003/87/EC (as amended by Directive 2009/29/EC).

  84. 84.

    Regulation 1031/2010 (Auctioning Regulation).

  85. 85.

    Article 26 of Regulation 1031/2010 (Auctioning Regulation). See also recital 7.

  86. 86.

    Article 30 of Regulation 1031/2010 (Auctioning Regulation). See also recital 8.

  87. 87.

    Regulation 784/2012.

  88. 88.

    Regulation 1042/2012. ICE Futures Europe is a Recognised Investment Exchange (RIE) and Recognised Auction Platform (RAP). It is regulated by the FSA.

  89. 89.

    See point 16 of Article 3 of Regulation 1031/2010 (Auctioning Regulation).

  90. 90.

    For the objectives of the process, see recital 3 of Regulation 1031/2010 (Auctioning Regulation) referring to the ETS Directive.

  91. 91.

    Article 4(1) of Regulation 1031/2010 (Auctioning Regulation).

  92. 92.

    Article 16 of Regulation 1031/2010 (Auctioning Regulation).

  93. 93.

    Article 4(2) of Regulation 1031/2010 (Auctioning Regulation). For definitions, see points 1–4 of Article 3 of Regulation 1031/2010 (Auctioning Regulation).

  94. 94.

    Recital 14 of Regulation 1031/2010 (Auctioning Regulation).

  95. 95.

    First subparagraph of Article 38(2) of Regulation 1287/2006 (implementing Article 4(1)(2) of Directive 2004/39/EC): “A spot contract for the purposes of paragraph 1 means a contract for the sale of a commodity, asset or right, under the terms of which delivery is scheduled to be made within the longer of the following periods: (a) two trading days; (b) the period generally accepted in the market for that commodity, asset or right as the standard delivery period”.

  96. 96.

    See ESMA (2014) number 12 of ANNEX I.

  97. 97.

    Point 11 of section C of Annex to Directive 2014/65/EU (MiFID II).

  98. 98.

    Article 6 of Regulation 1031/2010 (Auctioning Regulation).

  99. 99.

    Article 15 of Regulation 1031/2010 (Auctioning Regulation).

  100. 100.

    Articles 18 and 19 of Regulation 1031/2010 (Auctioning Regulation).

  101. 101.

    Articles 6(3) and 19(2)(d) of Regulation 1031/2010 (Auctioning Regulation).

  102. 102.

    Articles 5 and 6 of Regulation 1031/2010 (Auctioning Regulation).

  103. 103.

    Article 5 and 7 of Regulation 1031/2010 (Auctioning Regulation).

  104. 104.

    For definitions, see Article 3 of Regulation 1031/2010 (Auctioning Regulation).

  105. 105.

    See recital 32 of Regulation 1031/2010 (Auctioning Regulation).

  106. 106.

    Article 59 of Regulation 1031/2010 (Auctioning Regulation).

  107. 107.

    Articles 36–43 of Regulation 1031/2010 (Auctioning Regulation).

  108. 108.

    Article 4 of Regulation 1031/2010 (Auctioning Regulation). For a definition, see point 11 of Article 3 of Regulation 1031/2010 (Auctioning Regulation).

  109. 109.

    Recital 27 of Regulation 1031/2010 (Auctioning Regulation): “…The auction platform should be responsible solely for conducting the auctions …” Recital 38 of Regulation 1031/2010 (Auctioning Regulation): “… it is inappropriate for the clearing system(s) or settlement system(s) to be bound by any obligations of specific performance of the delivery of allowances …”

  110. 110.

    Emissions Trading Master Agreement for the EU Scheme (Version 3.0, 2008).

  111. 111.

    Recital 14 of Regulation 1031/2010 (Auctioning Regulation).

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  1. Dept. of Accounting and Commercial Law, Hanken School of Economics, Vaasa, Finland

    Petri Mäntysaari

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Mäntysaari, P. (2015). Electricity Generated from Renewable Sources and Emission Marketplaces. In: EU Electricity Trade Law. Springer, Cham. https://doi.org/10.1007/978-3-319-16513-4_7

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