Reporting Corporate Renewable Energy Consumption in China

Transcription

1 June 2016 Reporting Corporate Renewable Energy Consumption in China The global market for market-based renewable energy products is evolving rapidly, thanks in large part to the clarity provided by the GHG Protocol Scope 2 Guidance, published by the World Resources Institute (WRI) as an amendment to the GHG Protocol Corporate Standard. As the market innovates to provide solutions that align with the guidance, one of the most exciting developments has been the establishment of the International REC Standard (I-REC). An independent third party standard, with a mission to provide international buyers of renewable energy with the same level of quality and assurance inherent within the voluntary North American REC market and Europe s Guarantees of Origin/EECS Standard. I-REC Standard The I-REC Standard is a not-for-profit association based in the Netherlands created by an international team of renewable energy experts with the goal of empowering electricity purchasers to make renewable consumption choices in any region of the world. Before I-REC there was no commonly accepted standard to document the origin of renewable electricity consumption outside North America and Europe. The association is a stakeholder-led organisation that provides a list of rules, regulations, and best practices which together form the I-REC Standard. The I-REC Standard provides the blueprint for a standardised tracking system that can be implemented in any country to provide an internationally recognised method for electricity attribute allocation. This platform facilitates the creation, trading and cancellation of renewable electricity tracking instruments: for consumers, traders, brokers, electricity suppliers, electricity generators, and national governments. The I-REC Standard builds on best practice from the North American REC market and Europe s Guarantees of Origin/EECS Standard system, independently providing companies with a single integrated tracking system to guarantee claims of renewable electricity consumption across different countries. The I-REC Standard eliminates the risk of double counting through the use of a robust and independent tracking system. In recognition of its integrity, the I-REC Standard has been cited in three leading corporate reporting frameworks as an example of a globally acceptable green power instrument: 1. GHG Protocol - Scope 2 Guidance 2. CDP - Guidance for companies reporting on climate change RE100 - Making credible renewable electricity usage claims

2 With the endorsement of these leading corporate reporting frameworks, the I-REC Standard is rapidly becoming the leading standard to guarantee claims of renewable electricity consumption in markets outside North America and Europe. The growth of I-REC Registered I-REC projects by technology across Asia Registered I-REC projects by technology within China An interactive version of this map is available upon request. Valid as of May 2016

3 Regional electricity grids in China The Chinese electricity grid consists of seven sub-regions plus Taiwan. I-RECs can be produced in any location in China and redeemed within the country for use by national consumers. This view is shared by the major reporting frameworks and is consistent with the approach of North America functioning as a single market for RECs, and Europe functioning as a single market GOs. Nevertheless it may be possible to source I-RECs from regions where the consumption takes place, or to develop new I-REC projects to meet demand. Registered I-REC capacity in MW per country The figure below charts registered I-REC capacity in megawatt hours (MW) for the eight markets authorised for I-REC issuance. In China registered I-REC devices represent over 800 MW of renewable generating capacity. This is more capacity than all the other markets combined. China is a good example of how rapidly market players can 800 activate new I-REC supply in response to corporate demand for I-RECs. Total installed renewable generating capacity Uganda Taiwan Vietnam Mexico Turkey Honduras India China

4 in China is in the order of 500,000 MW, so I-REC capacity of 800 MW still represents a fraction of 1% of the available renewable energy. Support from environmental NGOs EKOenergy is an eco-label for renewable electricity owned by a pan-european network of environmental NGOs. EKOenergy only certifies power production that adheres to strict environmental criteria and which receives endorsement from local NGOs. In 2015 EKOenergy extended into China where a number of wind power production sites have been registered. The first completed I-REC transaction was based on EKOenergy-backed wind power production in China in In addition to the environmental criteria, for every EKOenergy labelled certificate purchased, a contribution is made to a fund supporting renewable energy projects in developing countries. The presence of Eco-labels represents a level of market maturity as they rely on a well-functioning tracking instrument infrastructure. I-REC provides this infrastructure within China thereby facilitating the expansion of EKOenergy. Domestic renewables policy in China It is anticipated that the Chinese government will introduce a market for renewable energy certificates to increase the use of renewable energy as the world's largest greenhouse gas producer works to reduce its reliance on coal. The timeline for this domestic scheme is uncertain but it is likely to be linked to delivering China s 2020 renewable energy targets. Until the operations and implementation timelines for China s domestic scheme are developed, it is not possible to evaluate how the two schemes will co-exist, but I-REC is confident of finding a path forward. I-REC have already successfully navigated this pathway in India, where the I-REC system co-exists with a domestic renewable energy certificate scheme. North America provides an alternative model for how voluntary and compliance tracking instrument markets can co-exist. In North America RECs are primarily used as an instrument by power generators to meet state level renewable generation targets; RECs that are surplus or not eligible for compliance markets are sold to corporates for the purpose of Scope 2 reporting. Until the details of China s domestic scheme are understood, I-REC will continue to operate in China, allowing the issuance of certificates as a demonstration of best practice, and engaging with local stakeholders to deepen understanding of the Standard. Importantly I-REC already limits China I-REC device registrations to government owned renewable assets, meaning I-REC participants are well positioned to align with the emerging government REC policy.

5 Natural Capital Partners Natural Capital Partners offers a global portfolio of environmental instruments, enabling businesses to meet their environmental targets and align with the leading sustainability reporting frameworks and initiatives: Climate leaders are integrating market-based solutions into their sustainability strategies to cost effectively deliver climate neutral and 100% renewable energy commitments. This is achieved through a portfolio of renewable energy tracking instruments, for Scope 2 reporting and carbon instruments to mitigate Scope 1 and 3 emissions. Contact For further information please contact Oliver Crouch ocrouch@.