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Green Power
Green tag challenges
Green tags are still novel in the United States, and many questions remain, including:
- Can the concept be conveyed to end-users in understandable terms?
- Will certifying bodies and environmental watchdogs be able to successfully protect against fraud, double-dealing, and subtler forms of double counting?
- How effectively will tags cross regional and international borders?
Explaining green tags
The first major challenge is communicating the concept of green tags. This is a new concept, and as such will require some effort to explain. Most professionals involved in renewable energy at the wholesale level are familiar with green tags – the communication/education challenge is now at the retail level. Utilities using green tags to supply green pricing programs, for example, have a choice to either explain green tags to electricity users in a way that can be quickly understood, or simply sell the green tags as green energy without attempting the difficult explanation. Idaho Power Company, Green Mountain Energy, and other green energy retailers are choosing to leave those details out of their consumer information. There is disagreement over whether this approach is appropriate.
Preventing double-counting
Double counting takes place when credit is sought or given repeatedly for the same environmental attributes so that the green characteristics are "counted" more than once. If this type of counting is allowed, it could undermine public confidence in the integrity of green tags. Because green tags are a new concept in U.S. jurisprudence, double counting in certain forms may not be restricted by law. Double counting gets particularly complex in situations where green tags are further unbundled to sell different attributes separately, such as CO2 offsets. (This is known as disaggregation). An effective registration and tracking process would "retire" the attributes once the green tag is sold to avoid a double sale and, hence, a double counting.
Defining who gets the green tag
One particularly thorny situation occurs when marketers attempt to create green tags out of green energy being sold under pre-existing bilateral contracts. Utilities purchasing such energy may be assuming that they are buying its environmental attributes, only to discover that the marketer with whom they are contracting is claiming that it retained the title to the attributes—because the contract was silent on the issue—and that it can now create green tags from that energy. Navitas Energy and Xcel Energy faced such a situation in 2001. Xcel was using wind energy purchased from Navitas to meet a legislative requirement to build or contract for 425 megawatts of wind power by the end of 2001. Navitas claimed that it retains the rights to the wind energy attributes and that only the commodity energy was being sold to Xcel. Such disputes will eventually disappear as those writing contracts learn that they need to explicitly account for who gets the green tags.
Other hurdles
Other policy hurdles and practical difficulties to be overcome include:
- Complex issues of property law that could surface concerning the transfer of title of environmental attributes and the retirement of those attributes.
- Questions about how long marketers should be allowed to bank green tags before the true-up (the accounting process of matching sold green tags with generated green energy).
- Mixed response from environmentalists. Some have opposed green tags based on the belief that they will create disincentives for building new renewables in certain cases and deepen regional pollution.
Recent efforts to establish green tag certification will do much to overcome these problems. For green tags to be accepted, they must be seen as credible, honest, and valid. The Center for Resource Solutions in San Francisco, Calif., has established a certification program for green tags, and as of March 2002 has been certifying green tag marketers that meet their criteria. A growing number of green tag marketers have received CRS certification.
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