Primer on Renewable Carbon and Green Certificates Trading

In the last few years, there has been an increased interest in renewable energy trading. This trading takes place in two different markets: the physical market for the sale of natural resources, infrastructure, and payment for physical commodities. The financial market, on the other hand, deals with the buying and selling of financial products derived from physical energy. This also includes market structures and institutions, market participants, products, and renewable trading software. This article takes a detailed look at the two major clauses in renewable energy trading and this include:

Carbon Trading

This is an environmental policy that seeks to reduce air pollution efficiently and limit an emission. The policy gives polluters a certain number of allowance consistent with those limits and permits them to buy and sell such allowance. The trading of a definite number of allowance leads to the market price being put on emissions, allowing polluters to work in the most cost-effective ways of reaching the required reduction. Over the years, emission trading has successfully been used to reduce emission that leads to acid rain and control greenhouse gas emissions. At the moment, industries all over the world buy and receive specific emissions permits that can, in turn, trade with other industries, while companies that are interested in increasing their emission are required to buy permits from other companies that produce lower emissions than their permits. Some countries currently operating the Emission trading scheme include Australia, Kazakhstan, New Zealand, Switzerland, Norway, Ukraine, Tokyo, the United States, etc.

Green Certificate Procurement

So many companies are also interested in procuring a renewable energy certificate which is a market-based instrument that represents the property rights to social, environmental, and other power attributes of renewable electricity generation. Green certificates also play an important role in accounting, tracking, and assigning ownership to renewable electricity use and generation. They are instruments used by electricity consumers to substantiate renewable electricity use claims. This certificate is issued when one megawatt-hour (MWh) of electricity is generated and delivered to the electricity grid from a renewable energy resource. Usually, the green certificate includes the following data certificate type, certificate data, capacity of the project, renewable fuel type, tracking system ID, renewable facility location, project name, project build date, unique identification number, certificate generation vintage, eligibility for certification or RPS and emissions rate of the renewable resource

In the United States, Green certificates are accepted as legal instruments through which renewable energy generation and use claims are substantiated. They are supported by various government levels, non-governmental organizations, regional electricity transmission authorities, and trade associations. 

The use of green certificates is one of the easiest and fastest ways to meet carbon reduction goals. There is no need for contractual agreements, and no physical implementation is required. At the moment, there are so many Renewable Energy Certificates providers who operate in deregulated national markets.