Purchasing Green Power – WWF recommendations

Jean Philippe Denruyter

Manager Global Renewable Energy Policy, WWF International

Climate Savers Workshop

Brussels, Wed 27 October 2010

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Content

1. What is green power and why do we buy it?2. Status Quo3. WWF recommendations4. Green Power and Climate Savers

What is green power?

• Renewable Energy is energy produced from renewable sources• Renewable Electricity is electricity from renewable sources• A small proportion of renewable electricity is sold as green

power or green electricity• On top of existing legal support schemes, the electricity

producer can obtain voluntary certificates per MWh produced, which he can sell on the private market. These certificates are then used by retailers to “green” their electricity offers to the final consumers.

1. What is green power & why do we buy it?

What is green power (cont’d)?

• Green electricity is a virtual product and a marketing product• A potential tool for individuals and companies to make a real

difference• A “feel good” product for individuals and a “brand greening” tool

for companies

1. What is green power & why do we buy it?

Three criteria for green power to be effective:

• Expand the renewable energy industry beyond legislated targets (“renewable energy additionality”)

• Create real emissions reductions that make a difference to global warming, i.e. reduce emissions over and above national emission reduction targets (“climate additionality”)

• Ensure the power we buy is ecologically sound – green power should have limited impacts on ecosystems (“eligibility”), e.g. hydropower, biomass…

Very few green power offerings comply with this!

1. What is green power &why do we buy it?

Climate additionality explained

• In countries with a Kyoto commitment, a voluntary contribution to a green power scheme no longer has any “additional” benefit, it simply helps governments meet targets they have to meet anyway.

• If a consumer spends a premium for green power, governments or electricity suppliers will have to spend less to cut their emissions. However the overall emission result is unchanged, the country simply meets its cap.

1. What is green power & why do we buy it?

Renewable energy additionality explained

• Green power demand is currently far lower than renewable electricity supply. As long as this is the case, electricity suppliers will be able to “tap” green power from the existing renewable electricity portfolio instead of producing new green power. This is especially obvious in Europe, where most of the “green power” sold is old hydropower from Norway.

• There are support policies for renewable energy. In most cases, it is a profitable business. Green power sales will just make the business even more profitable, if consumers pay a premium for green power

1. What is green power & why do we buy it?

Renewable energy additionality explained (cont’d)

• Several countries have mandatory renewable energy targets.• The credits from green power sales are counted towards the

target• The more a consumer spends on green power the less

electricity suppliers need to spend to cut their emissions• The overall renewable electricity production remains the same.

1. What is green power & why do we buy it?

Eligibility explained

Very few green power offers make any promises regarding mitigation of the ecological impacts of generating green power

1. What is green power & why do we buy it?

Positive:

• Grid-connected solar PV growth ~ average 60% every year for the past decade

• The last 5 years, wind power capacity grew an average of 27% annually, solar hot water by 19% annually, and ethanol production by 20% annually.

2. Status Quo

Negative:

• Several economies in transition have seen very little of the growth in renewable energy; The CDM market is concentrated in a few countries like China and India

• This despite the crucial role renewable energy can play in providing modern energy services to the 1.6 billion people currently without access to them.

• In 2009: 19% RES, ~ 90% from traditional biomass and large scale hydro. We are still far from our goal.

IF we want -80% GHG by 2050 we NEED 25% global RES growth per year starting NOW (Climate Solutions 2)

2. Status Quo

Uptake of green power

• Worldwide ~ 6 million green power customers• EU: 209 TWh of certificates issued in 2009, 91% hydro (Norway, a

major hydro producer, issued 62 percent of all certificates under the EECS in 2009.)

• USA: >1 million green power consumers purchased 24 TWh in 2008

• Australia: 900,000 green power residential consumers and 34,000 business consumers who collectively purchased 1.8 TWh in 2008.

• Japan’s Green Power Certification system sold 58 GWh of certificates in 2006

2. Status Quo

WWF Green Power Policy

A. Reduce your consumption as much as possible

B. Produce renewable energy, on-site or off-site

C. Purchase green power in line with WWF’s three criteria

3. WWF Recommendations

A. Reduce your consumption as much as possible

It is recommended that Climate Savers companies first and

foremost invest in energy efficiency measures in order to reduce

their energy consumption, and complement this effort with producing

and/or financing and/or purchasing renewable energy.

3. WWF Recommendations

B. Produce Renewable Energy, on-site or off-site

3. WWF Recommendations

• If the company wants to produce renewable energy as part of their Climate Savers commitment:1. The company can invest in the production of renewable energy on site.

2. The company can financially be involved in the production of renewable which

may or may not happen on site.

• In most countries this renewable energy will be ‘eligible’ but not necessarily ‘additional’, as it will contribute to the national targets. However, since the company is actively involved in the production of renewable energy and the development of infrastructure and the market for renewable energy, it is considered as eligible for Climate Savers.

C. Purchase green power in line with WWF’s 3 criteria

3. WWF Recommendations

• OK Power in Germany• Naturemade Star (pay attention, there is also a Naturemade

Basic) in Switzerland• Green Power in Australia• Green-e in the US• Green Power, Japan’s certicificate system• GoldPower , based on Gold Standard RE projects (global)

WWF is not in a position to individually assess and endorse non-labeled green power offers in different countries.

GoldPower Explained

GoldPower is a global green power product developed by Climate Friendly, in association with WWF. It is sourced from Gold Standard renewable electricity projects in developing countries that have no Kyoto target, making the resultant reductions in greenhouse gas emissions truly additional.

3. WWF Recommendations

GoldPower Explained (cont’d)

3. WWF Recommendations

• A company has emissions from electricity use. • A customer’s electricity use in any country is matched with certificates in

megawatt hours (MWh) from developing country Gold Standard projects that produce as much renewable electricity as the customer uses.

• This creates a global renewable energy product accessible anywhere in the world.

Benefits GoldPower

3. WWF Recommendations

• Meets formal carbon additionality criteria• 100% emissions savings – certified• Reportable under WWF’s Climate Savers programme – Help

companies meet emission reduction targets • Reportable under the Carbon Disclosure Project (*)• Creates certified greenhouse savings equal to client’s emissions• Verified and audited by independent third parties• Global standard product so customers can source consistent

quality renewable energy for multi-national operations

* In answers 21.4 and 21.5 in CDP Investor Survey 2010

Scope 2 reporting under Climate Savers

• The Climate Savers reporting guidelines are generally in line with the CDP reporting guide for Scope 2 Indirect GHG emissions .

• The green power purchases (e.g., project-based carbon credits, Renewable Energy Certificates, etc.) are reported separately from company’s own emissions; however there are some subtle differences between the reporting guidelines of Climate Savers and CDP.

4. Green power and Climate Savers

Climate Saversguidelines

CDP 2010 Information Request

1 The company generates renewable electricity on-site

0 Emissions 0 Emissions if RECs are not sold or passed on; Grid average factor if RECs are sold or passed on

2 The company invests in off-site generation of renewable electricity

0 Emissions (for the equivalent share of its financial contribution)

Grid average emission factor

3 The company hosts renewable electricity generation by third parties on its facility; the generated electricity is fed into the grid

0 Emissions Grid average factor

4 The company purchases renewable electricity from green power labels endorsed by WWF

0 Emissions (for the quantity of renewable electricity actually purchased, or the equivalent share in the case of a blended product)

Grid average emission factor OR a different figure if they are considered as contractual arrangements

5 The company purchases GoldPower 0 Emissions 0 Emissions

6 The company purchases renewable electricity from green power labels or schemes which are not endorsed by WWF

Grid average emission factor

a) Emission factor specific to the method of generation if electricity is NOT counted in calculating the national grid average, OR b) Grid emission factor if electricity is counted in calculating the national grid average

Scope 2 reporting under Climate Savers (cont’d)

Thank you

www.panda.org/climatesavers

www.panda.org/renewables