As Kommersant found out, power plants with renewable energy sources, as well as hydroelectric power plants and nuclear power plants, can be forced to issue green certificates for part of the generation in the new national certification system. Such proposals are being worked out by the Ministry of Energy and the Ministry of Economy. The ministries hope that the certificates will be accepted in the EU in the future to reduce the carbon tax on goods from the Russian Federation. Market Council warns that compulsory issuance of certificates will require regulation and turn the free market into a “distribution certificate system.”
Wind and solar power plants (wind power plants and solar power plants), as well as nuclear power plants and large hydroelectric power plants in Russia may be required to certify part of the electricity generation in the new national certification system, sources in the market told Kommersant and confirmed at the Ministry of Energy. “The Ministry of Energy is working out proposals on the mandatory issuance of certificates for part of the volume of electricity production by low-carbon generation facilities,” the ministry explained to Kommersant. The Ministry of Economy also noted that the issue of compulsion is being worked out.
A Kommersant source familiar with the preparation of proposals says that the mechanism for compulsory issuance of certificates may be based on a model for regulating exchange sales of petroleum products. Today, their manufacturer is obliged to sell at auction 3–11% of the volume of products, depending on the type. The Ministry of Energy and the Ministry of Economy did not clarify to Kommersant what volume of production of renewable energy sources, hydroelectric power plants and nuclear power plants is proposed to be given under mandatory green certificates.
Green certificate confirms that the generated electricity is generated by a low carbon power plant. One certificate is issued for one megawatt-hour of generation. It is assumed that the industry will be able to use the certificates to confirm the reduction of the carbon footprint of products with the introduction of a cross-border tax in the EU. However, there is still no clarity on this issue: the EU has not yet published the regulatory framework on carbon regulation.
Green certificates in the Russian Federation will be issued by the structure of the Market Council (regulator of energy markets), registration of issuance and circulation will take place on the blockchain platform of Sberbank. The generator must validate the facility to enter the system, but the possible cost of this service is unknown. The market volume is estimated at 200 million MWh per year – almost half of the generation of renewable energy sources, hydroelectric power plants and nuclear power plants. At the same time, the Russian Federation already has an international certification system I-REC. An enterprise can also conclude a free bilateral agreement (BPC) with a specific power plant.
Most of the generators surveyed by Kommersant support the proposals of the Ministry of Energy. Hevel said that “it is not against the mandatory nature of the issuance of certificates, this will create the necessary volume of supply to launch the market.” Rosenergoatom and RusHydro are also positive about the initiative. Gazprom Energoholding says they are “interested in the early launch of the national system.”
Fortum (controlled by the Finnish Fortum) opposes the mandatory issuance of certificates. “All obligations of generators regarding electricity and capacity of renewable energy facilities are already fixed in power supply contracts, and there are no obligations to issue certificates there,” the company says.
At the same time, the mechanisms for distributing certificates between consumers are still unclear. The industry wants to receive certificates for payments under contracts for the supply of power, but generators, the Ministry of Energy and the Ministry of Economy are against (see “Kommersant” of July 7).
Industrial consumers of electricity have also criticized the mandatory issuance of certificates. “These artificial restrictions will narrow the competition for ways to confirm low-carbon content and thereby cause unreasonable price increases, hindering exports and the development of the economy as a whole,” said Kommersant in the Energy Consumers Community.
The Market Council told Kommersant that the option of compulsory issuance of certificates was considered, but this would require “more serious regulation”. “If the problem is solved in this way to ensure a sufficient supply of inexpensive certificates on the market, then it is necessary not only to oblige to issue a certificate, but also to sell it on a common trading floor, introducing a price limit,” the regulator says. But then it is “no longer a free market for certificates, but a regulated distribution system.”
There is no expediency in the mechanism, since there is no risk that generators will not want to issue certificates, according to the Market Council. There they warn that it will be possible to conclude a UDV for the volume of certificates, but it will not be possible to present it to prove the purchase of green energy, unless this UDD stipulates the transfer of an appropriate number of certificates to the buyer.