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Global Status Report

Policy Landscape / Green Power Purchasing and Utility Green Pricing
There were more than 4.5 million green power consumers in Europe, the United States, Canada, Australia, and Japan in 2004. Green power purchasing and utility green pricing programs are growing, aided by a combination of supporting policies, private initiatives, utility programs, and government purchases. The three main vehicles for green power purchases are utility green-pricing programs, competitive retail sales by third-party producers allowed through electricity deregulation (also called "green marketing"), and tradable renewable energy certificates. Community-organized green power programs also exist in Japan. As markets expand, the price premiums for green power over conventional power have continued to decline. In the United States, retail green power premiums are now typically 1–3 cents/kWh.[N34]

In Europe, green power purchasing and utility green pricing have existed in some countries since the late 1990s. By 2004, there were almost 3 million green power consumers in the Netherlands, supported by a tax exemption on green electricity purchases. Other countries in Europe with retail green power markets include Finland, Germany, Switzerland, and the United Kingdom. Germany’s green power market has grown steadily since 1998, with more than 600,000 consumers purchasing 2,000 GWh in 2004. Eighteen European countries are members of RECS, a renewable energy certificates system founded in the late 1990s to standardize and certify renewable energy certifi- cates and trading. By 2005, a cumulative total of 33,000 GWh of renewable energy certificates had been issued, with nearly 13,000 GWh of certificates used for consumer purchases of green electricity.*1

The United States has an estimated half-million green power consumers purchasing 4,500 GWh of power annually. Green power purchasing began in earnest around 1999. By 2004, at least 2 GW of additional renewable energy capacity was built in the United States to accommodate this market.*2 The federal government is the largest single buyer of green power, with the U.S. Air Force purchasing 320 GWh annually. By 2004, more than 600 utilities in 34 states had begun to offer green-pricing programs. Most of these offerings were voluntary, but regulations were enacted in five states between 2001 and 2003 that require utilities to offer green power products to their customers. Utility green pricing accounted for almost half of green power sales in 2004.

Many large companies in the United States, from aerospace contractors to natural foods companies, are voluntarily buying green power products. Among these corporate buyers are IBM, Dow, Dupont, Alcoa, Intel, HP, Interface, Johnson & Johnson, Pitney Bowes, Staples, Baxter, FedEx Kinkos, General Motors, and Toyota. Public and non-governmental initiatives have facilitated these buyers. The U. S. Environmental Protection Agency’s "Green Power Partnership" had 600 partners by 2005, purchasing 2,800 GWh of green power annually. And a voluntary "Green-e" certification program has helped build credibility in the market. In Japan, there were an estimated 60,000 green power consumer-participants by early 2005. These are utility customers who voluntarily contribute to green power through cooperatives, community organizations, and utility programs. Green power in Japan initially developed through voluntary community organizations. The first green power program was initiated by a consumer’s cooperative union, Seikatsu Club Hokkaido. Working with the regional utility, the union collects electricity bills, along with voluntary contributions from its members and the general public, and invests in renewable energy projects.Members can purchase shares in wind power projects, thus creating the first "citizen- owned" wind turbines. Similar green funds have been established elsewhere in Japan, and ten Japanese electric utilities now offer customers an option to contribute to a green power fund to support wind and solar systems. As of early 2005, there were 57,000 customers making monthly voluntary contributions to their electricity bills.

Renewable energy certificate markets have also emerged in Japan. The Japan Natural Energy Company (JNEC) now sells green power certificates to commercial and industrial customers, including more than 50 large Japanese companies like Sony, Asahi, Toyota, and Hitachi. JNEC will sell certifi- cates to these companies representing a total of 60 GWh over 15 years, at premiums of 2.4–3.4 cents/kWh (3–4 Yen/kWh). Australia has over 100,000 green power consumers purchasing from a variety of retailers. And green power purchasing is spreading to other countries. One example is China, where twelve enterprises in Shanghai began to voluntarily purchase green electricity from three local wind farms in 2005, the first such purchases in China. The price premium was high—6 cents/kWh (0.53 yuan) higher than conventional power.

Footnotes

*1 In the United Kingdom, the distinction between voluntary green power purchases and renewable energy obligations by utilities has been questioned. There are claims that green power voluntary purchases in the United Kingdom are not always "additional" to existing utility obligations. In Germany, more than 50 percent of the green power market is served by hydropower plants, predominantly those put into operation well before the German electricity market was liberalized.
*2 Green power purchases in the United States are separate from and additional to any renewable energy mandates, for example renewables portfolio standards.
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