Environmental Certificates – Wholesale Energy Education Series

Australia has several compulsory environmental schemes which are run by state and federal governments in their respective jurisdictions.

The federal scheme is the Renewable Energy Target (RET), which aims to reduce greenhouse gas emissions from the supply-side of the electricity sector, by encouraging the development and generation of renewable energy sources into the system.

There are two schemes administered under the RET, specifically the Large-scale Renewable Energy Target (LRET), and the Small-scale Renewable Energy Target (SRES). The LRET was designed to encourage large scale renewable energy within the transmission network, from sources such as wind and solar farms.

This generation is tracked using Large-scale Generation Certificates (LGCs). In comparison, the SRES supports small-scale renewables within the distribution network, such as solar hot water and rooftop solar. The implementation of these small-scale technologies are tracked via Small-scale Technology Certificates (STCs).

The state-run schemes predominantly focus on reducing energy sector emissions from the demand-side, by encouraging businesses and residential consumers to replace inefficient appliances with energy saving alternatives, or to reduce peak demand.

As part of the Energy Security Safeguard scheme, New South Wales (NSW) has implemented Energy Savings Certificates (ESCs), as well as the Peak Demand Reduction Scheme certificates (PDRS). The Victorian Energy Upgrades scheme creates Victorian Energy Efficiency Certificates (VEECs).

The Australian Capital Territory’s (ACT) Energy Efficiency Improvement Scheme and South Australia’s Retailer Energy Productivity Scheme (REPS) are not certificate based schemes; however, they also seek to encourage energy saving activities.

While the supply of all certificates is ensured by renewables projects and energy savings activities, the demand for certificates is created by imposing an annual liability on predominantly gas and electricity retailers based on their retail load, or in the case of the PDRS, their level of peak demand.

Interestingly, some schemes have seen increasing levels of voluntary activity from companies looking to proactively reduce their emissions and energy consumption costs.