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Green-e Energy National Standard Update
December 18, 2012
Green-e Energy is pleased to announce that it has recently updated its main governing document, the Green-e Energy National Standard. This update includes the following three changes and additions:
- California’s AB32 Cap-and-Trade Program. An appendix has been added with new rules for eligibility and verification of CA facilities, and of facilities directly delivering electricity into CA. The CA Air Resources Board has established a “set-aside” mechanism for greenhouse gas emissions allowances. Green-e Energy certified retail sales supplied by such facilities must use this mechanism if they are eligible. These rules affect generation starting in 2013, include that which is used toward 2012 certified sales. This appendix is provided below.
- Canadian Generators and EcoLogo. Section III.H of the previous version of the National Standard has been removed, with the result that Canadian non-hydro generation facilities no longer have to be EcoLogo certified to be used Green-e Energy certified sales. Likewise, Green-e Energy certified sales made to Canadian customers may now be supplied by any Green-e Energy eligible facility.
- New Jersey in RGGI. Earlier this year, New Jersey dropped out of the Regional Greenhouse Gas Initiative (RGGI). New Jersey has been removed from Green-e Energy’s rules around RGGI.
The updated version 2.2 of the National Standard is available here: www.green-e.org/energystandard
California Greenhouse Gas Cap-and-Trade Program Summary
As one of the strategies to meet the state’s Global Warming Solutions Act (AB32), California has implemented a cap-and-trade program for greenhouse gas emissions arising from the electricity sector and other sources. This program commenced January 1, 2012, with the first enforceable compliance obligations beginning with 2013 electricity generation and emissions. The California cap-and-trade policies are implemented by the California Air Resources Board (ARB), and will affect renewable electricity generation that either takes place in the state or that is “directly delivered” into the state.
The Green-e Energy National Standard currently requires that bundled renewable electricity and unbundled renewable energy certificates (RECs) (collectively “renewable MWh”) contain their full CO2 emissions reduction benefits. In a region where the emissions from the electric power sector are capped, Green-e Energy certification requires that all of the CO2 benefits of renewable electricity generation are demonstrably preserved to the benefit of the renewable energy buyer. California has adopted a provision that allows retail voluntary market sales of renewable MWh that are sourced from in-state renewable generators, or from facilities that directly deliver electricity to the California grid, to have California Greenhouse Gas Emission Allowances retired on behalf of the retail purchaser. This allowance retirement will enable these renewable MWh to retain their Green-e Energy eligibility. The rules and mechanisms for retiring allowances on behalf of retail voluntary renewable energy sales are generally referred to as “set-aside” provisions, and under California’s Cap-and-Trade program rules are called the Voluntary Renewable Energy Program (VREP).
In response to the creation of VREP, Green-e Energy has changed a number of rules around affected renewable MWh in order to maintain the intent and function of the Green-e Energy National Standard. These Green-e Energy rule changes are provided below and also in the currently posted version 2.2 of the National Standard. These changes are in effect for Green-e Energy certified sales that are supplied by generation occurring on or after January 1, 2013, including sales made in 2012 that are supplied by first quarter 2013 generation.
Resulting Green-e Energy California Policy
Facilities that are eligible for the VREP must follow the rules set forth in Section 1, below. Facilities that are in or directly delivering to California that are not VREP-eligible, but otherwise meet all other relevant Green-e Energy rules, must follow Section 2. All facilities must also meet all applicable Green-e Energy eligibility rules regardless of VREP-eligibility. If the seller of a Green-e Energy certified product is also an obligated entity under the California cap-and-trade program, allowances used for compliance with Green-e Energy rules may not also be used toward the seller’s cap-and-trade compliance obligation. Proof that allowances were retired properly will be required for Green-e Energy verification.
RECs generated by facilities that are outside of California and not directly delivering to California do not require use of the VREP or allowance retirement in order to be eligible for use in Green-e Energy certified sales.
Table: Requirements to Retire a California-Eligible Allowance Based on Generator Location
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Renewable Electricity or RECs from Facility Located:
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Allowance Necessary for Eligibility?
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In CA or Directly Delivering to CA
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Yes. Must retire allowance through VREP, or retire CA-eligible allowances separately
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Outside of CA and not Directly Delivering to CA
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No. VREP or CA-eligible allowance retirement not necessary for eligibility.[2]
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Because California cap-and-trade policies are required by law, Green-e Energy cannot offer grandfathering related to any affected Green-e Energy rules.
Determining VREP Eligibility
VREP eligibility is determined by Section 95841.1 of the ARB’s Final Regulation Order, Subchapter 10 Climate Change, Article 5, title 17, California Code of Regulations (“Final Regulation Order”), which states that in order to produce VREP-eligible MWh, generators in or directly delivering to California must be certified as RPS eligible by the CEC and have a commercial online date of July 1, 2005 or later, or must meet design and installation standards pursuant to the California Energy Commission’s (CEC) Guidelines for California’s Solar Electric Incentive Programs, third edition, June 2010. The Final Regulation Order is available at: http://www.arb.ca.gov/cc/capandtrade/capandtrade.htm
1) VREP-Eligible Facilities
Renewable MWh generated by Green-e Energy eligible generators located in or directly delivering to California on or after January 1, 2013 can only be Green-e Energy certified if allowances set aside for the VREP are retired on their behalf. For renewable MWh that meet VREP eligibility requirements (VREP-eligible MWh), allowance retirement can occur through VREP reporting. Section 95841.1 of the Final Regulation Order provides details on the attestations and other documentation that must be included with a VREP application submitted to the ARB.
A) Generator Online Dates Must be July 1, 2005 or Later (“New Date” Definition)
Eligible renewable MWh generated in or directly delivered to California must come from facilities that first came online on July 1, 2005 or later in order to be eligible for VREP. When the New Date described in Section II.E of the National Standard is later than 2005, the Green-e Energy New Date will be applicable in place of California’s July 1, 2005 date.
B) Renewable Resources must be Eligible under Green-e Energy AND VREP Rules
The renewable MWh sold must come from facilities that meet the resource eligibility definitions of both Green-e Energy and the VREP, which refers back to the resource definitions of the California Renewables Portfolio Standard (RPS). Where one set of rules is more restrictive than the other, the more restrictive rules must be followed. Eligibility of any individual generator will be determined by considering all the requirements of the Green-e Energy National Standard, the CEC’s “Renewables Portfolio Standard (RPS) Eligibility Guidebook” [3] and the ARB’s Final Regulation Order. For example, hydroelectric facilities over 30 MW in capacity are ineligible if they are located in or directly delivering to California.[4] Additional restrictions apply to the incremental increase in generation resulting from efficiency improvements to a hydroelectric facility. Certain additional restrictions on biomass, biodiesel, fuel cells and municipal solid waste also apply.
C) VREP is not Available for Wholesale Sales, Wholesale Sales Must Include Independent Retirement of Allowances
Because only retail renewable energy transactions are eligible for the VREP, ALL Green-e Energy certified wholesale sales of MWh from facilities generating in or directly delivering to California MUST follow the instructions in Section 2 below to retire California-eligible allowances.
2) Facilities Not Eligible for VREP
Independent retirement of California-eligible allowances must be demonstrated for Green-e Energy certification of renewable MWh generated in or directly delivering to California. The first seller of such MWh in a Green-e Energy certified retail or wholesale transaction must demonstrate retirement of California-eligible emissions allowances[5] in amounts in accordance with the ARB’s allowance calculation methodology for VREP.[6] An account in the “Compliance Instrument Tracking System Service” (CITSS) emissions allowance tracking system is necessary in order for a Green-e Energy participant to retire California-eligible allowances. Alternatively, the seller of a California-eligible allowance to a Green-e Energy participant may retire a California-eligible allowance on behalf of the participant’s Green-e Energy certified sale.
Additional Considerations Pertaining to California and Green-e Energy Policies
Verification and Reporting Timing
According to ARB rules, a renewable MWh end user or seller must report sales of MWh generated in a particular year to the ARB no later than July 1 of the year following the year of generation. The ARB will accept reporting prior to July 1; early reporting is preferred in order to secure VREP allowances and streamline Green-e Energy verification. Coupled with Green-e Energy vintage requirements (see Section III.B of the National Standard), sellers of Green-e Energy certified products that use generation from the second half of the year prior to the sales year must therefore report the generation from the prior year in accordance with the ARB’s deadline for that prior year of sale. For example, if a seller uses November 2015 generation in a 2016 Green-e Energy certified sale, the November 2015 generation must be reported to the ARB by July 1 of 2016 in order to have allowances retired on its behalf through the VREP. Proof of allowance retirement, either through VREP or through separate allowance purchase and retirement, must be provided to Green-e Energy by the annual Green-e Energy verification submission deadline or within 10 business days of submission to the ARB, whichever is later.
Full Carbon Value and Renewable MWh Sales Exceeding VREP Allowance Availability
Each year, California will set aside a finite number of allowances through VREP that can be retired on behalf of sales of eligible voluntary renewable MWh from that year. The ARB will allocate VREP allowances on a first-come first-served basis, and there is the possibility that the volume of eligible renewable MWh sold and reported to VREP could exceed the equivalent amount of VREP allowances necessary to ensure that each renewable MWh can claim its full carbon value. If the VREP has been fully subscribed, and there are no allowances remaining for VREP-eligible renewable MWh, it is up to the seller to procure and retire allowances in an amount equal to what the CA ARB would have retired had there been sufficient allowances in the VREP; see footnote 6 for calculation details.
Attestations and Reporting Requirements
California requires certain attestations are made by those applying for allowance retirement under VREP, and also has various program requirements pertaining to the data and reports that must be submitted to qualify for VREP. It is recommended that renewable energy sellers seeking allowance retirement in California read through the full set of requirements, in Section 95841.1 of the Final Regulation Order or call the ARB hotline at (916) 322-2037.
Updates to California Regulations
The California Air Resources Board and California Energy Commission might at any time undertake processes to update or change rules that may affect the VREP rules. Green-e Energy rules will have to adapt to these changes, in most cases without providing sellers of affected renewable MWh the flexibility of grandfathering or generous notice. To stay informed of pending comment periods and updates, the ARB and CEC provide the following resources to:
Footnotes:
[1] As defined in Section 95102(a) of the ARB’s “Regulation for the Mandatory Reporting of Greenhouse Gas Emissions” (Mandatory Reporting Regulation or MRR), available at http://www.arb.ca.gov/cc/reporting/ghg-rep/ghg-rep.htm. As of 9/18/2012, the definition is as follows: “”Direct delivery of electricity” or “directly delivered” means electricity that meets any of the following criteria: (A) The facility has a first point of interconnection with a California balancing authority; (B) The facility has a first point of interconnection with distribution facilities used to serve end users within a California balancing authority area; (C) The electricity is scheduled for delivery from the specified source into a California balancing authority via a continuous transmission path from interconnection of the facility in the balancing authority in which the facility is located to a final point of delivery located in the state of California; or (D) There is an agreement to dynamically transfer electricity from the facility to a California balancing authority.”
[2] If facility is in a RGGI state (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont), see Section A.2 of Appendix A of this document.
[3] See: http://www.energy.ca.gov/renewables/documents/
[4] Under limited circumstances the following types of hydropower may be eligible: generation attributable to incremental capacity at a hydropower facility over 30MW; and 40MW hydro facilities that are “Operated as Part of a Water Supply or Conveyance System” according to the California RPS rules. Hydropower facilities must also comply with Section II.A.4 of the Green-e Energy National Standard.
[5] At the time of publication, only California Greenhouse Gas Emission Allowances are included, but if California links with Quebec or other jurisdictions then allowances from a jurisdiction that is accepted for compliance by California will also be accepted by Green-e Energy. California-eligible offsets are NOT included.
[6] See Section 95841.1(c) of the Final Regulation Order for calculation details available at http://www.arb.ca.gov/cc/capandtrade/capandtrade.htm. The annual Emissions Factor referenced in this section is available in Section 95111(b)(1); as of 9/15/2012 this factor is 0.428 MT of CO2e/MWh.
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