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Energy Efficiency

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01-11-2008

Tradeable energy efficiency certificates in Australia

Author: David J. Crossley

Published in: Energy Efficiency | Issue 4/2008

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Abstract

Tradeable energy efficiency certificates are created in Australia as part of a larger baseline-and-credit emissions trading scheme, the Greenhouse Gas Reduction Scheme (GGAS) that operates in the State of New South Wales and the Australian Capital Territory. GGAS aims to reduce greenhouse gas emissions associated with the generation and use of electricity through project-based activities to offset the production of emissions. GGAS applies in two jurisdictions that are part of a wholesale electricity market operating across a total of six jurisdictions and this imposes some constraints on scheme design. Nevertheless, GGAS has developed a set of comprehensive operational systems and procedures to validate energy efficiency projects and verify the abatement they produce. To the end of calendar year 2006, nearly ten million energy efficiency certificates have been created under GGAS, representing nearly ten million tonnes of CO2-e abatement. Some significant issues have arisen regarding the creation of certificates from the mass distribution of small energy-efficient household appliances. However, the experience with GGAS still demonstrates that tradeable energy efficiency certificates can be an effective mechanism for incentivising greenhouse gas emissions abatement in the context of a baseline-and-credit emissions trading scheme.

previous article Tradable energy efficiency certificates: the Italian experience

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In Australia, the four functions of the electricity industry, generation, transmission, distribution and retailing, have been unbundled into separate businesses. In some other countries, electricity retailing is called ‘supply’.

Australia signed the Kyoto Protocol but did not ratify it until December 2007, after a new Commonwealth (federal) Government was elected.

There are no generators located in the ACT.

Some generators that supply large customers directly are obligated parties with the obligation to reduce emissions limited to the extent of those customer loads.

To be eligible for the creation of NGACs, the new installation must produce less greenhouse gas emissions than all comparable installations in NSW or, if there is no such installation in NSW, in Australia. Where this is the case, NGACs can be created only for the reduction in greenhouse gas emissions over and above what is reduced by comparable installations. Where no comparable installation exists in NSW or Australia, the Scheme Administrator may determine a level of greenhouse gas emissions per output or service.

The DSA Rule does not specify how reduction in economic benefit is to be assessed.

Since demand side abatement comprises activities on the customer side of the electricity metre, this provision was included in the DSA Rule for avoidance of doubt.

In fact, the default abatement factor facilitated the development of very large projects involving the mass distribution of small energy-efficient household appliances.

Except for projects involving mass distribution of small energy-efficient household appliances.

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Title: Tradeable energy efficiency certificates in Australia
Author: David J. Crossley
Publication date: 01-11-2008
Publisher: Springer Netherlands
Published in: Energy Efficiency / Issue 4/2008
Print ISSN: 1570-646X
Electronic ISSN: 1570-6478
DOI: https://doi.org/10.1007/s12053-008-9018-6

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Other articles of this Issue 4/2008

Interactions of white certificates with other policy instruments in Europe

Tradable energy efficiency certificates: the Italian experience

Utility energy efficiency schemes: savings obligations and trading

Multiple instruments to change energy behaviour: The emperor’s new clothes?

Market imperfections and economic efficiency of white certificate systems

Measurement and verification strategies for energy savings certificates: meeting the challenges of an uncertain world