Energy Certificates for a Better Climate | World Bank Institute (WBI)

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STORY HIGHLIGHTS

  • Energy certificates can be effective market instruments to support countries with ‘green’ development
  • India shares cutting-edge experience with other countries funded through the World Bank’s South-South Experience Exchange Facility Trust Fund
  • The India Carbon Market Conclave 2011 is a forum for domestic and international policy dialogue on climate change and carbon markets
 
October 14, 2011―What are good policy instruments to support climate change in developing countries? How did India implement a successful scheme for energy certificates? Governments, private sector, and civil society organizations are eager to learn from others what worked and what didn’t when it comes to climate change. Over the course of four days in September 2011, government delegates from Kenya, the Philippines, and Thailand participated in a two-day Knowledge Exchange with India's public and private sector learning about the successful use of energy certificates.
 

open-quotesThis validated the usefulness of South-South Exchanges and also the key role that a multilateral agency like the World Bank can play close-quotesElisea Gozun, Presidential Advisor on Climate Change in the Philippines’ Office of the President

They then attended the India Carbon Market Conclave, the largest platform to engage with the Indian carbon market. Both events marked the start of a multi-phase knowledge exchange on renewable energy and energy efficiency schemes in developing and emerging economies and carbon markets. 
 
“This validated the usefulness of South-South Exchanges and also the key role that a multilateral agency like the World Bank can play,” said Elisea Gozun, Presidential Advisor on Climate Change in the Philippines’ Office of the President about the learning experience in India.
 
What are Energy Certificates…?
 
Energy certificates can be effective market instruments to support countries with ‘green’ development. Once a government has set up a scheme, producers of renewable energy can obtain Renewable Energy Certificates (RECs). They can then be sold to companies and government entities to fulfill renewable energy targets set by the government. RECs provide renewable energy producers with an additional revenue stream while giving companies the ability to bolster their green credentials by purchasing renewable energy. While traditional carbon emissions trading programs promote low-carbon technologies by increasing the cost of emitting carbon, RECs encourage carbon-neutral renewable energy. 
 
…and How Did India Successfully Use Them?
 
India is considered cutting-edge when it comes to the design and implementation of successful energy certificates. The country expects to save billions through fuel savings, avoiding emissions, and improved transmission infrastructure. In an effort to increase the use of renewable energy, the central government introduced policy schemes to incentivize the public and private sector at the state level. States could purchase a ‘certificate’, equivalent of one megawatt hour of electricity, which could then be used toward mandatory renewable energy targets prescribed by the government. As a result, more than 120,000 megawatt hours of renewable energy were certified under the REC scheme between March and August 2011. Under India’s Perform, Achieve and Trade Scheme (PAT) industry players can generate Energy Saving Certificates (ESC) which certify that a certain reduction of energy consumption has been attained.
 
Learning from India
 
Thailand's Greenhouse Gas Management Organization (TGO) had heard of India’s success and wanted to learn from it. It requested a knowledge exchange which was funded in part by a grant of the World Bank’s South-South Experience Exchange Facility Trust Fund. At the event, participants heard from Indian peers about their policy design and application around energy certificates and bidding methods. “The usefulness of the system is worth a try, even as a voluntary system. The workshop reveals how important it is to create the infrastructure to gain success. The concept of India’s energy savings certificates could be modified in our energy efficiency programs for buildings,” confirmed Sirithan Pairoj-Boriboon, Executive Director of the TGO.
 
India Carbon Market Conclave 2011
 
The India Carbon Market Conclave, which took place right after the workshop, is the largest venue to engage with the Indian carbon market. Held on September 7-8, 2011 in New Delhi, the Conclave is India's flagship event in the carbon market space providing an all-inclusive forum for global carbon market stakeholders to engage with Indian project developers. It is a place to share knowledge on current trends and emerging scenarios of the global and Indian carbon market, and a forum for domestic and international policy dialogue on climate change and carbon markets. Public and private sector representatives interacted with more than 50 high-level speakers in plenary sessions and side events.  
 
Peer-to-Peer Learning Goes Virtual
 
Peer-to-peer learning between countries was at center stage. If one country has already developed frameworks and requirements for climate action that work, it is easier for others to learn from this experience. Leonardo Omullo from the Kenyan Ministry of Environment and Mineral Resources sees a possibility to “integrate India’s example with (Kenya’s) existing policy where possible and develop new policies to support REC and ESC by creating a framework for market-based mechanisms.”  
 
The World Bank Institute is planning to organize follow-up learning events via videoconference during which participating countries can continue discussions on the policy instruments for climate finance.
 
The India Carbon Market Conclave was organized by the World Bank Institute with financial support from the Carbon Finance-Assist Trust Fund, Federation of Indian Chambers of Commerce and Industry (FICCI), Indian Ministry of Environment of Forests, and the International Emissions Trading Association (IETA).