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Contribution of green labels in electricity retail markets to fostering renewable energy

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  • Mulder, Machiel
  • Zomer, Sigourney P.E.

Abstract

In European countries, retailers are obliged to disclose the energy source and the related environmental impacts of their portfolio over the preceding year. The electricity supplied in the Dutch retail market is presented as renewable energy for 34%, but this relatively high share is for 69% based on certificates (Guarantees of Origin) which are imported from in particular Norway. The certificates are used to sell green electricity to consumers. The premium for green electricity which is actually paid by Dutch consumers is no more than a few percentages of the retail price. The low level of this premium is related to the abundant supply of certificates at low marginal costs from Norway. This also means that the premium for green electricity is too low to give an incentive for investments in new capacity. Hence, the current labelling system for renewable electricity is mainly valuable, besides being an instrument for tracking and tracing of renewable energy, as a marketing instrument for electricity retailers. The effectiveness of Guarantees of Origin as a policy instrument to foster renewable electricity sources is weak. This effectiveness can be raised by implementing restrictions on the international trade or the issuance of new certificates.

Suggested Citation

  • Mulder, Machiel & Zomer, Sigourney P.E., 2016. "Contribution of green labels in electricity retail markets to fostering renewable energy," Energy Policy, Elsevier, vol. 99(C), pages 100-109.
    • Handle: RePEc:eee:enepol:v:99:y:2016:i:c:p:100-109
    DOI: 10.1016/j.enpol.2016.09.040
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    Cited by:

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    5. Willems, Bert & von der Fehr, Nils-Henrik & Banet, Catherine & Pollitt, Michael & Le Coq, Chloé, 2022. "Retail Energy Markets Under Stress : Lessons Learnt for the Future of Market Design," Other publications TiSEM a0d3ecbd-bad2-4bdd-a0cf-2, Tilburg University, School of Economics and Management.
    6. Calikoglu, Umit & Aydinalp Koksal, Merih, 2022. "Green electricity and Renewable Energy Guarantees of Origin demand analysis for Türkiye," Energy Policy, Elsevier, vol. 170(C).
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    10. Galzi, Pierre-Yves, 2023. "Do green electricity consumers contribute to the increase in electricity generation capacity from renewable energy sources? Evidence from France," Energy Policy, Elsevier, vol. 179(C).
    11. Ákos Hamburger, 2019. "Is guarantee of origin really an effective energy policy tool in Europe? A critical approach," Society and Economy, Akadémiai Kiadó, Hungary, vol. 41(4), pages 487-507, December.
    12. Li, Peixian & Ng, Jeremy & Lu, Yujie, 2022. "Accelerating the adoption of renewable energy certificate: Insights from a survey of corporate renewable procurement in Singapore," Renewable Energy, Elsevier, vol. 199(C), pages 1272-1282.
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    More about this item

    Keywords

    Electricity market; Environmental policy; Consumer behaviour; Electricity labels; Tradable green certificates;
    All these keywords.

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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