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Berit Tennbakk, ECON Håkan Sköldberg, Profu
Analyses of markets for Tradable Green
Certificates (TGC) ECON, Profu, Chalmers, EME
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Current status Sweden and Norway no TGC union?

• Sweden
• Started national TGC market in 2003
• New legislation 2006 Extension in time
• and geography Wants common market
• Norway
• Broad political support, but
• The conflict All hydro, no wind?
• Start of a common Swedish-Norwegian market
  delayed again!
• Earliest start-up 2008
• But efficiency gains may be eroded

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Current status Denmark The TGC market that
disappeared ?
1999 Power market reform Implement green
certificates market 2002 Implementation
postponed Waiting for common EU TGC market 2005
Denmark likely to reach renewables target
without TGC market Still waiting for common EU
market More positive attitude last 18 months?
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Current status Finland not interested?

• Finland likely to reach renewables targets
• Mostly negative attitude towards TGC
• Minister of industry
• Forest industry
• New climate strategy does not include provisions
  for TGC market
• No prospect for a common Nordic TGC market!

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A common Nordic TGC market Huge scope for
efficiency gains
Profu
TGC prices
Net TGC import
150
6
Import
4
Common Nordic price
100
2
0
SEK/MWh
TWh
50
-2
Export
-4
0
-6
Swe
Nor
Fin
Den
Swe
Nor
Fin
Den
Nordic TGC market integration may save almost 0.5
Billion Euro !!
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TGC generation National vs Common market (A
Nordleden scenario based on EU Directive 2001/77)
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International TGC trade depends on national quotas
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Short-term supply limitations
Larger potential in Norway (given cost level)
Impossible to realize full potential in the
short term Lowest cost alternatives not realized
first Will investors realize this? Yes
scarcity? No wrong investments
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Increased quotas over time
Sweden 10 TWh new renewables within 2010
(extended to 16 TWh in 2016) Norway two
alternatives 10 TWh new renewables (N10) within
2015 (compared to 1.1. 2004) 20 TWh new
renewables (N20) within 2015 (compared to 1.1.
2004)
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Wind enters at full speed
Increase in quota leads to Increased wind
investments in both countries Some hydro in
Norway, marginal increase in bio Some bio in
Sweden, no increase in hydro
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A common Swe-Nor market for TGCs 21 TWh in Swe
and 20 TWh in Nor (2016)
Profu
Profu
Separate markets
Common market
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Certificate prices in Norway and Sweden (Study
by Swedish Energy Agency)25
Markal-Nordic model runs
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TGC schemes may be powerful instruments !
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TGCs vs. TEPs Who benefits?Some observations
Renewables policies are costly Sweden gains
because of lower certificate prices Effect on
producer surplus depends on ambition level Short
vs. long term effects Renewables producers
gain CO2 market Ambiguous producer surplus
effect Amount of free allocations? Renewables
gain particularly old renewables TGC market
dampens price effect renewables replace new gas
power
2012 Short medium term effects
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Thank you!
www.NordicEnergyPerspectives.org
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Differences in marginal costs for generating TGCs
in the Nordic countries (2010)
Profu