TRADABLE CERTIFICATES

Tradable Certificates are known by a number of names, including:

• Tradable Renewable Certificates (TRECS);
• Renewable Certificates (RECs); and
• Green Certificates.

All of the above mean the same thing: they guarantee the "green" character of energy produced from renewable sources.  The tradable certificates are issued by a central organisation to the producer of renewable energy.  The producer therefore generates electrical energy as well as the benefit derived by sourcing this energy from renewable sources.  These are sold separately, as shown in the following figure.

The electrical energy can now be mixed with that from other energy sources, without losing track of its 'greenness'.

A tradable certificate system represents the infrastructure of all organisations that issue, verify, trade and use tradable certificates.  It provides a robust mechanism for tracking and verification of electricity generated from renewable energy, and an efficient and flexible economic tool to promote renewables and trade their benefits.

Tradable certificates are expected to play a key role in stimulating renewable energy sources. This will be accomplished through international trade of 'greenness'.  This approach is gathering momentum: many governmental organisations, such as the European Commission, are starting to include the concept in their energy policy; and developing countries are becoming aware of the potential of tradable certificates as an export commodity while at the same time wanting to be able to guarantee sound development of their fast growing power sector

These positive forces provide business opportunities to technology providers, project developers (including energy companies), certificate brokers and financial institutions.