<html><head><style type="text/css"><!-- DIV {margin:0px;} --></style></head><body><div style="font-family:arial,helvetica,sans-serif;font-size:10pt">Duncan and Network Participants,<br><br>Great question. I'm taking off my moderator hat again, and just posting as a Network participant myself.<br><br>I would also be interested to hear others perspectives on ROCs. I have always treated them essentially the same as RECs here in the United States.<br><br>I do have to take an exception to Duncan's characterization of RECs. Despite the oft repeated statements of REC marketers, they do not represent the environmental benefits of renewable energy in any practical sense. Most or all of the environmental benefits of renewable energy are indirect to the act of producing renewable energy. A simple way to explain it is that RECs are denoted in mega-watt hours (MWh). Last time I checked, this was not the commonly accepted units for
trading in environmental benefits (what ever that means).<br><br>More seriously, we have to be very careful about how we define and think about environmental commodities, what we say they represent, and what claims we make when we purchase and retire them. Just saying something something represents something does not make it so. Markets do not operate well when based on ambiguously defined commodities and unsubstantiated marketing claims.<br><br>I won't go on futher, but instead refer you to a couple papers I wrote on this subject. I have circulated them before to the Network, but they seem particularly applicable to this question.<br><br>If you would like a copy of the published versions just email me. Or you can freely access the prepublication versions at: <br><a href="http://www.princeton.edu/%7Emgillenw/discussionpapers.htm">http://www.princeton.edu/~mgillenw/discussionpapers.htm</a><br><br><br><p style="margin: 0in 181.65pt
6pt 0in;"><span style="font-family: Arial;">Gillenwater, M., <a href="http://dx.doi.org/10.1016/j.enpol.2008.02.036" target="_blank"><span class="nfakPe">Redefining</span> <span class="nfakPe">RECs</span> (Part
1): Untangling attributes and offsets</a>, <i>Energy Policy,</i> Volume 36, Issue 6, June 2008, Pages 2109-2119.</span></p><p style="margin: 0in 181.65pt 6pt 0in;">Renewable energy and greenhouse gas emissions markets are currently in
a state of confusion regarding the treatment of Renewable Energy
Certificates (RECs). Should consumers buy RECs or emission offsets?
After examining this question, the author concludes that RECs are not
equivalent to emission offset credits, and as currently defined, the
retiring of a REC may have no impact on emissions from electric power
generation. Consumers who purchase RECs in voluntary green power
markets are providing financial assistance to renewable generators in
the form of a production subsidy. Generators that sell RECs are not
transferring emission reductions, since they are unlikely to have
ownership or the ability to quantify reductions using a commonly
accepted standard. More importantly, RECs currently sold in voluntary
markets do not pass credible additionality tests and can, at best, be
expected to have a market demand effect, which will be less than the
supply of RECs on the market. REC definitions that use the term
“environmental attributes” or “environmental benefits” are almost
universally ambiguous, providing the mistaken impression that consumers
are purchasing a good instead of subsidizing a public good.<br><span style="font-family: Arial;"></span></p><p style="margin: 0in 181.65pt 6pt 0in;"><span style="font-family: Arial;"><br></span></p><p style="margin: 0in 181.65pt 6pt 0in;"><span style="font-family: Arial;">Gillenwater, M., <a href="http://dx.doi.org/10.1016/j.enpol.2008.02.019" target="_blank"><span class="nfakPe">Redefining</span> <span class="nfakPe">RECs</span> (Part
2): Untangling certificates and emission markets</a>, <i>Energy Policy, </i>Volume 36, Issue 6, June 2008, Pages 2120-2129.</span></p><p style="margin: 0in 181.65pt 6pt 0in;">Renewable energy and greenhouse gas emissions markets are currently in
a state of confusion regarding the treatment of Renewable Energy
Certificate (RECs). How should emission-trading schemes treat RECs? How
can emission mitigation policies provide real incentives for renewable
generation? The objective of REC markets should be to promote
additional renewable energy investments. The author asserts that
defining RECs in terms of attributes, especially off-site attributes,
does not further this goal. Ambiguous language such as “environmental
attribute” or “environmental benefit” creates confusion in the
marketplace while failing to address the relevant coordination issues
with Renewable Portfolio Standard compliance markets, voluntary
emission offset markets, or emission cap-and-trade markets.
Specifically, defining RECs in terms of off-site attributes creates a
number of problems, including that once an emissions cap-and-trade
scheme is in place, such definitions of a REC can become indefensible.
The author proposes to redefine RECs in terms of on-site attributes,
which resolves the aforementioned problems and allows compliance and
voluntary renewable energy and emission markets to function without
conflicts. Ideally, environmental commodities should be homogeneous,
first best measures of the relevant environmental good, as well as
easily measured and verified. The author proposes tradable
environmental commodities that achieve these characteristics.</p><br>michael<br> <span style="font-family: verdana,helvetica,sans-serif;"></span><font style="font-family: verdana,helvetica,sans-serif;" size="2"><br></font><hr style="width: 100%; height: 2px; font-family: verdana,helvetica,sans-serif;"><font style="font-family: verdana,helvetica,sans-serif; color: rgb(127, 127, 0);" size="2"><a rel="nofollow" target="_blank" href="http://www.princeton.edu/%7Emgillenw/biography.htm">Michael Gillenwater</a><br><a rel="nofollow" target="_blank" href="http://www.princeton.edu">Princeton University</a><br><a rel="nofollow" target="_blank" href="http://www.princeton.edu/%7Estep/">Science, Technology and Environmental Policy Program</a><br><br><a rel="nofollow" target="_blank" href="http://www.ghginstitute.org">GHG Management Institute</a> (Dean of Institute)*<br></font><font style="font-family: verdana,helvetica,sans-serif; color: rgb(127, 127, 0);"
size="2"><a rel="nofollow" target="_blank" href="http://www.ghgnetwork.org">GHG Experts Network</a> <span style="text-decoration: underline;"></span> (Executive Director)*</font><font style="font-family: verdana,helvetica,sans-serif; color: rgb(127, 127, 0);" size="2"><br></font><font style="font-family: verdana,helvetica,sans-serif; color: rgb(127, 127, 0);" size="2"><a rel="nofollow" target="_blank" href="mailto:michael.gillenwater@ghginstitute.org">michael.gillenwater@ghginstitute.org</a></font><br><font style="font-family: verdana,helvetica,sans-serif; color: rgb(127, 127, 0);" size="2"><a rel="nofollow" target="_blank" href="mailto:gillenwater@ghgnetwork.org">gillenwater@ghgnetwork.org</a></font><br><span style="font-family: verdana,helvetica,sans-serif; color: rgb(127, 127, 0);"></span><hr style="width: 100%; height: 2px; font-family: verdana,helvetica,sans-serif; color: rgb(127, 127, 0);"><span style="font-family:
verdana,helvetica,sans-serif; color: rgb(127, 127, 0);"></span><font style="font-family: verdana,helvetica,sans-serif; color: rgb(127, 127, 0);" size="1">* Organizations are independent non-profits and are not associated with Princeton University.</font><br style="font-family: verdana,helvetica,sans-serif;"><div style="font-family: arial,helvetica,sans-serif; font-size: 10pt;"><br><br><div style="font-family: times new roman,new york,times,serif; font-size: 12pt;">----- Original Message ----<br>From: Duncan Noble <d.noble@fivewinds.com><br>To: discuss@ghgnetwork.org<br>Sent: Wednesday, July 9, 2008 5:18:51 PM<br>Subject: [GHG Network] GHG Emission Factors for UK Renewable Electricity<br><br><div id="idOWAReplyText343" dir="ltr"><div dir="ltr"><font color="#000000" size="2" face="Arial">I have a question about
Renewable Obligation Certificates (ROCs) in the UK. What is the appropriate
GHG emission factor to use when you purchase renewable electricity from a
supplier who also receives a separate financial benefit from "selling" the
ROC?</font></div><div dir="ltr"><font size="2" face="Arial"></font> </div><div dir="ltr"><font size="2" face="Arial">In North America, RECs represent the
environmental benefits associated with renewable electricity generation. Hence
if you want to claim that you are using renewable electricity with a zero GHG
emission factor, your options would include: self generating renewable
electricity, purchasing green power, or purchasing RECs. A supplier can not sell
both green power to customer A and then the RECs to customer B, as that would be
double counting the environmental benefit. If the RECs are disaggregated from
the electricity, there is no green power to sell.</font></div><div dir="ltr"><font size="2" face="Arial"></font> </div><div dir="ltr"><font size="2" face="Arial">The situation with ROCs in the UK appears
to be similar, but not quite the same. Can someone from the UK offer some
guidance on how ROCs affect GHG emission factors?</font></div><div dir="ltr"><font size="2" face="Arial"></font> </div><div dir="ltr"><font size="2" face="Arial">Cheers ... Duncan</font></div><div dir="ltr"> </div><div dir="ltr"><font color="#000000" size="2" face="Arial"><strong>Duncan
Noble</strong></font></div></div><div id="idSignature16977" dir="ltr"><div><font size="2" face="Arial"><strong>Five Winds
International</strong></font></div><div><em><font size="2" face="Arial">- Value without Burden -</font></em></div><div><em><font size="2" face="Arial"></font></em> </div><div><font size="2" face="Arial"><a rel="nofollow" target="_blank" href="http://www.fivewinds.com">www.fivewinds.com</a></font></div><div><font size="2" face="Arial"></font> </div><div><font size="2" face="Arial">NEW Tel. for July: +1.867.979.5576</font></div><div><font size="2" face="Arial"></font> </div><div><strong><em><font size="2" face="Arial">Five Winds is a Carbon Neutral Company
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