FUEL MIX DISCLOSURE

With Directives 1996/92/EC and 2003/54/EC of the European Parliament and of the Council, the EU introduced liberalisation of the electricity markets of its Member States, and has created the framework for a common market for electricity.

The European Internal Markets Electricity Directive 2003/54/EC requires Member States to introduce labelling schemes for electricity sold to final consumers, which provide details about the contribution of each energy source to the overall fuel mix of the supplier and the respective environmental impact.  Such a labelling scheme requires a procedure for allocating electricity generation "attributes", such as fuel type, CO2 emissions etc, to electricity suppliers and their customers. 

The instruments used by Member States for support of electricity produced from renewable energy sources and high efficiency cogeneration, such as feed-in tariffs, quota obligations, tax exemptions etc., may require similar allocation systems.

Finally, there is a growing market for "Green Power" in Europe, which also requires a reliable allocation system for electricity generation attributes, e.g. to avoid double-selling.

Hence systems are required which allocate generation attributes to electricity suppliers and consumers respectively, to facilitate a variety of policies on the European and Member State level.  The implementation of such "tracking" systems for electricity can also facilitate the promotion of renewable energy sources and high-efficiency cogeneration in the internal market for electricity.  Harmonisation of such tracking schemes across Europe is a keystone for the development of the internal market.

Directive (2003-54-EC) requires, among other things, electricity suppliers to inform their customers of the source and environmental impact of the energy they consume.  As it is not feasible - nor would it be desirable for good economic and operational reasons - to directly connect consumers to the type of energy they desire, suppliers must administer some form of tracking.  Suppliers can achieve this in three ways:

• By reference to the overall energy blend for the country of origin. This does not take account of international trade, and the resulting statistics are thus flawed.  In addition, it prevents suppliers from competing on the basis of energy blend;
• By tracking the associated energy contracts.  This is unduly onerous, given that the energy may hjave been bought and sold a number of times before it is supplied; and due to the impact of swap contracts (where equal amounts of energy from different types of technology are swapped, resulting in a nett flow of environmental benefit), or
• By certification.  This provides a simple and effective way of administering disclosure: all the supplier has to do is to count up the certificates issued for each technology.

Directives 2001/77/EC and 2004/8/EC create a framework for the promotion of electricity produced from renewable energy sources (RES electricity), and of cogeneration based on useful heat demand.  These Directives contain regulations on Guarantees of Origin, which serve to enable producers of RES electricity and high efficiency cogeneration to demonstrate that the electricity they sell is produced from renewable energy sources or high efficiency cogeneration.

Such guarantees of origin provide an efficent and simple means of facilitating disclosure.