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With the coming of a capped carbon trading scheme by 2010, it is likely that under the scheme (unless specific provisions is made by Government, as yet unannounced) the purchase of green power by households will not cut total emissions. It is my understanding that by purchasing green power you will effectively be freeing up some "brown power", that is fossil fuel generated electricity, from under the cap and make it available to the producer / distributor to sell to another user.

It may be better for the environmentally focused household to not pay the surcharge for the purchase of green power directly, instead buying the power straight off the grid (which will have a certain percentage of renewably sourced power, be it 5%, or 20% or more) and instead buy carbon credits or Renewable Energy Certificates (RECs) directly and then rip them up or in other ways take them out of the system, so they are not counted towards the cap. At this stage I do not know whether this will be available to the normal household purchaser. (In this site I have continued to use the term Green Power however it should be taken to mean electricity supplied under a system where your carbon production has been offset, preferably outside the cap.)

I believe RECs are the same. If there is, say, a 20% mandatory renewable energy target (MRET) this means that producers have to be able to supply to the government at the end of the year enough RECs to account for 20% of their total energy production. They do this by producing enough green electricity to generate the RECs themselves or they have to purchase the RECs on the market directly from consumers or from traders. Therefore if you don't sell your RECs, the electricity producer is going to have to source them from another supply, therefore increasing the total amount of renewable electricity generated to above the 20% target.

Another thing I don't understand is this recent (Dec 2008) revamp of the photovoltaic "subsidy" system whereby people who install 1MWh of photovoltaic panels instead of the normal 1 REC, they will instead receive 5 RECs. If these RECs are still counted as 1MWh doesn't this effectively undermine the 20% MRET? If a proportion of the RECs are purchased from home photovoltaics the 20% renewables target will not be reached. This system has also completely removed the Government subsidy on home photovoltaics, not one red cent will come from Government, with all money coming from the power producing industry. If a home owner now decides that they don't want to sell their RECs from the photovoltaic system (for the reasons outlined above) they get no grant or subsidy for their system, even though they would be contributing to reducing the total greenhouse gas production.

Given that under the MRET (and the carbon trading scheme) the power producers have an obligation to supply a set percentage renewable energy, they should be required to meet the full cost of the production of the REC, however in the case where they purchase RECs from a domestic photovoltaic system they are only paying a proportion of the cost of producing the REC. Effectively the home owner is subsidising the power producer for the production of the REC.

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