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Energy certificates: where we’ve been and where we’re going

Updated: Mar 1, 2021

Momentum is definitely building behind climate action in New Zealand, both mandatory and voluntary. In the voluntary space in particular, it is increasingly clear that businesses are taking up the challenge to reduce their environmental impact by progressing toward carbon neutrality.

I set up the New Zealand Energy Certificate System in 2018 to give energy users more information about the way that energy is generated in New Zealand, to help them make better purchasing and investment decisions.

Now 33 months on, we’re looking back at what we’ve achieved so far; and forward to what’s next.

Looking back...

Over the last couple of years, hundreds of thousands of certificates have been purchased from renewable energy generators, by dozens of energy users. Use of the system is ramping up, with 1000% growth from last year. As well as gentailers, we also have a number of independent generators participating in the system, such as Kea Energy and Kawatiri Energy.

These first companies to adopt the system have made a conscious choice about what energy generation they want to support, and are playing a part in helping New Zealand make progress towards lowering emissions. Their decisions have returned hundreds of thousands of dollars of additional revenue to renewable generators, further increasing the attractiveness of renewable technologies as an energy source.

We have published our first Residual Supply Mix calculation, a vitally important tool to ensure that voluntary action does not result in double-counting. It provides an emissions factor for organisations reporting on their emissions to use if they do not purchase certificates. As the volume of certificates bought goes up over time, this emissions factor will increase.

We believe that everything we do needs to be part of the bigger picture of system change, and so we’ve joined the Sustainable Business Council, the BusinessNZ Energy Council, and are a Bronze Partner of Carbon and Energy Professionals.

... looking forward

As usage of the system grows, we are discussing the pros and cons of the system, in order to ensure that we are developing it in the best possible way. We welcome scrutiny, such as that from the Forever Project, as it creates an opportunity for us to learn more about what New Zealanders value, and what they want the system to become. In this case, the feedback has shown us that there is a strong desire for certificate use in New Zealand to result in as much meaningful impact/change as possible.

Renewable Energy Certificates are a new concept in New Zealand, and it will take time for their effect to be felt on any scale. However, we are ramping up our efforts to improve the system, and have been watching and supporting developments overseas closely.

We are supporting the development of the EnergyTag initiative, a not for profit project that aims to develop an international standard for granular reconciliation (certification reconciled over a shorter time period than annual). Large players are moving in this direction, for example the commitment by Google to provide 24/7 carbon-free energy at all of its data centres and campuses worldwide by 2030.

We’re speaking to a number of generators, both large and small, and may be able to offer more certificates with a wider range of properties in the coming months. For example, a generator may choose to produce more power when emissions are high, rather than just when prices are high. Certificates could fill the gap of any difference in revenue, making the decision cost-neutral and resulting in an overall lower emissions factor for the grid.

In addition, we are looking at other properties that could be tagged, like whether a project supports local generation, or projects with co-benefits - such as biodiversity, local wetland restoration or increasing social cohesion through reducing energy poverty or employment. Certificate purchasers may also wish to see details on sustainability projects that generators plan to implement with the income from certificate sale.

We will also be working hard to support the growing certificate market. We are talking to a number of prospective renewable generation projects, and helping existing RE project operators to join the system. We continue to make sure that smaller participants have all the information that they need to participate, and have begun to see independent trades happening in the market. We are considering what else we should be doing to support the growth of the certificate market and would love your feedback.

We recognise the need to also contribute to decarbonisation of the transport and process heat sectors, and so will be introducing a standard for the certification of renewable gas products such as hydrogen and bio-methane in the first half of this year. These certificates will enable energy users to support the development of new, low-carbon gas production in New Zealand.

And to keep up with these potential developments, we will be growing the team, reviewing and fortifying our operational processes, as well as further developing the capability of the NZECS Registry.

There are exciting developments ahead and we intend to engage with our existing users, and wider stakeholders, in significant proposed developments to the system. We will reach out proactively, but we welcome all commentary and feedback. Please keep an eye out for announcements via the newsletter [subscribe here], and we would appreciate you sharing this to anyone in your networks who may be interested.

Tim Middlehurst, CEO, Certified Energy

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