A green certificate is a tradable good that proves that a certain electricity was generated from renewable energy sources.
Usually, one certificate represents the generation of one megawatt hour (Mw/h) of electricity. What is defined as “renewable” varies from certificate trading system to certificate trading system.
As a rule, at least the following sources are considered renewable:
- Wind (often further subdivided into onshore and offshore)
- Solar energy (often further subdivided into photovoltaic and thermal energy)
- Waves (often further subdivided into onshore and offshore) and tides (often further subdivided into onshore and offshore)
- Geothermal energy
- Hydropower (often further subdivided into microhydro, small and large)
- Biomass.
Green certificates represent the environmental value of the renewable energy produced. The certificates can be traded separately from the energy produced. Several countries use green certificates as a means to bring support for green power generation closer to the market economy, rather than the more bureaucratic investment subsidies and feed-in tariffs. Such national trading schemes exist, for example, in Poland, Sweden, Italy, Belgium.
Once renewable energy is in the grid, it can no longer be separated from conventionally generated energy. Thus, buying a green certificate is equivalent to buying a certificate that the certificate holder has consumed energy from the renewable share of the total energy in the grid. Therefore, the purchase of a certificate has no influence on how much renewable energy was actually generated – only how it was distributed.
