The Certificates of "Green" Energy
There is a misconception that if you enter into a renewable energy contract, then the electrons of electricity your household receives comes from a solar farm or other renewable sources. But this is not the case. Electricity generated is shared on the grid. So, how can you know whether the electricity you use was produced in an environmentally-friendly way?
Renewable Electricity Guarantee
In Japan, the majority of electricity comes from imported coal, natural gas, and oil, as well as a small proportion of renewables like hydro, solar, and biomass. (See article on Green Energy in Japan for a breakdown of the energy mix.) Despite using different sources to generate electricity, the electricity produced is mixed together on the shared electricity grid, making it difficult to differentiate how each electron of electricity was sourced.
It can be helpful to have some source of proof, guaranteeing the user that the electricity they used has been generated by a renewable (green) energy source. This purpose is fulfilled by Certificates.
In Japan, there are three ways to trade the environmental value of renewable energy:
- Non-Fossil Value Certificates
- J-Credit
- Green Energy Certificates
Trading certificates allows corporate consumers to support the renewable energy sector, which is part of showcasing the companies' corporate social responsibility (CSR).
Non-Fossil Value Certificate (NFV)
Non-Fossil Value Certificate (NFV) is one of the newest forms of certificates. It can be given to low carbon sources, such as renewable or nuclear power, and can be exchanged on the Japan Electric Power Exchange (JEPX). Previously, these certificates were only available for power generated under the Feed-In Tariff (FIT) scheme (renewable energy). These certificates were created in 2019 for the retail electricity sellers, which emerged after the market liberalization in 2016.
How does the FIT work? The FIT requires electricity retailers to purchase electricity produced at a price and period set by the Ministry of Economy, Trade, and Industry (METI). Although the system has increased the electricity bill for end-users, it has guaranteed the purchase of electricity and supported renewable electricity generators to be able to stand on their own feet. It is likely for the scheme to be removed in the near future once it is no longer needed.
J-Credits
J-Credit are credits issued for projects that aim to reduce carbon emissions, reduce energy consumption, or increase carbon absorption. The impact of the projects are measured by CO2 reduction values and the credits are given accordingly.
Green Energy Certificate
Green Energy Certificate has been issued by private companies in Japan since 2001. This certificate system enables individuals and corporations to protect and support the renewable energy sector. For the certificates, third party organizations first assess whether the Power Generation Facility has the capability to generate green power. Power generators are then able to apply for certification for the amount of green power they generated within a generation period, and then sell it to anyone that is interested in purchasing green electricity.
How to Purchase Renewable Electricity Certificates in Japan
| Green Electricity Certificate | J-Credit (Renewable-Origin) | Non-fossil Certificate (Feed-In-Tariff/Renewable Energy) | |
|---|---|---|---|
| Issuer of Certificate | Third Party Certificate Issuer | Government | Green Investment Promotion Organization |
| Type of Energy Certificate Available | Solar, Wind, Hydro, Geo, Bio | Solar, Wind, Hydro, Geo, Bio | Solar, Wind, Hydro, Geo, Bio |
| Who can purchase? | Anyone | Anyone | Electricity Retailer |
| Purchasing Method | From Certificate Issuer | Auction or from credit owner/broker | Auction at JEPX |
International Campaigns
CDP (Carbon Disclosure Project) - is a non-profit charity that runs the global disclosure system for investors, customers, and other key stakeholders. They have created a system for measuring and managing climate change initiatives and scoring corporations and cities on their practices. Non-Fossil Certificates can financially assist the sustainable efforts of the CDP.
RE100- is a global initiative that is led by The Climate Group. It is a campaign designed to encourage businesses to commit to 100% renewable power, and works to increase demand for renewable energy. In order to be listed on the RE100 campaign, Green Electricity Certificates, J-Credits, and Non-fossil certificates with an identifiable plant are required.
SBT (Science Based Target) - targets adopted by companies to reduce greenhouse gas (GHG) emissions are considered “science-based” if they are in line with the Paris Agreement targets to limit global warming and rise in carbon emissions to 1.5°C.
| Certificate | Country/Region | Certificate System |
|---|---|---|
| Guarantee of Origin (GO) | Europe, Iceland, Norway, and Switzerland | EECS (European Energy Certification System) |
| Renewable Energy Certificate (REC) | United States, Canada, Puerto Rico | Regional System |
| International Renewable Energy Certificate (I-Rec) | Brazil, Chili, China, Columbia, Guatemala, Honduras, India, Israel, Jordan, Malaysia, Mexico, Philippines, Saudi Arabia, Singapore, South Africa, Taiwan, Thailand, Turkey, UAE, Uganda, Vietnam | National System |
Challenges for Consuming Renewable Energy
In Japan, the procurement methods and volume of renewable energy is quite limited. Japan has mostly relied on fossil and mineral fuels for power, and has only recently began growing its renewable sources. As a result, companies in Japan are either exploring direct procurement contracts, such as a Power Purchase Agreement (PPAs), to secure renewable energy attributes or seeking onsite renewable electricity generation to meet their needs. Some companies are also claiming to have invested in grid-mix renewables by purchasing certificates such as NFVs, Green Energy, and J-Credits.
What is a PPA? A PPA is a contract/agreement between two parties, one which generates renewable electricity and one which purchases electricity (generally an environmentally conscious company that is looking to increase its corporate social responsibility). Companies like Amazon and Google have used PPAs to offset their carbon emissions.
Renewable Retailers
What is over-generation of power? Over-generation of electricity means that more electricity is produced than consumed, which means that energy is often curtailed and wasted. Solar curtailment often happens as there is an excess generation of solar during the day but limited generation during the night when demand for electricity is higher.
Retailers play an important part in the Electric Market because they can solve the problem of over-generation of power by connecting buyers to sellers through innovative offerings.
Retailers can package, market, and sell renewable energy to buyers and also incentivizes buyers to shift their energy usage to times when greener energy is most available.
Choose a Renewable Electricity Retailer: There are sites you can use to see a list of renewable retailers
The three biggest are Shinzen Denryoku, Minna Denryoku and Greena. They offer several plans varying from (100% CO2 free, 30% CO2 free or 100% RE).