The term of “green energy” that has been developing for a long time in Europe and the guarantee of origin, which shall provide that, certificate of origin by other name and especially the preference for energy consumers to consume “green energy” has gained momentum recently for Turkey.
Mr. Fatih Dönmez, Minister of Energy and Natural Resources, used the expressions “We have always been in favor of domestic and renewable energy. We have set our course, objectives and policies with this philosophy. We shall not only expand domestic and renewable energy production, but also its use. We stated before that we are working on a renewable energy tariff for consumers who want it for this purpose. With this tariff, we shall give this opportunity to users who want to consume electricity produced only from renewable sources. Work on the tariff is ongoing.” in the statement he made in early 2020.
After these statements, opinion of EMRA, EVÇED and EPİAŞ, which cooperated with the tariff became issue of concern. EMRA President Mr. Mustafa Yılmaz, in his statement published on the website of EMRA on 26.06.2020 stated, “There shall be opportunities for consumers who want to use electricity generated from renewable energy. We will determine a new vision on this issue and the new instrument of our energy exchange shall be green certificate products”. Immediately after this incident, on 01.07.2020, with the announcement of “Exposure Draft Regulation on the Renewal of the Renewable Energy Resource Guarantee Certificate in the Electricity Market and the Regulation on the Amendment of the Regulations on Certification and Support of Renewable Energy Sources.” by EMRA, an important step has now been taken in bringing long-lasting theoretical processes into practice.
Following these developments, as of 28.07.2020, the regulation No. 31199 Amending the Regulation on Certification and Support of Renewable Energy Resources was published in the Official Gazette.
While the Renewable Energy Resource Guarantee Certificate is on the agenda-, it is also important to understand the work and legal basis for documenting renewable energy sources. When examining a global registration system such as guarantees of origin, it is necessary to take into account paradigms from registration blockchain applications built on smart contracts, particularly local and regional harmonization policies, from blockchain applications, renewable energy, carbon footprint and sustainability policies, business, management, trade, implementation and demand side.
The Guarantee of Origin – has three main objectives. These are:
Tracking the source of electrical energy produced based on renewable energy sources up to the final consumer point of production;
Development of products that can effectively respond to green electricity consumption demands of final users in a free consumer status who has the right to choose their supplier;
Providing the mechanism by officially performing the green energy certification.
As mentioned above, “with the aim of spreading the use of renewable energy sources in electricity generation and consumption and protecting the environment, a certain amount or proportion of electrical energy supplied to consumers, tracking the production of renewable energy sources by licensed legal entities, to establish a renewable energy resource guarantee system that allows consumers to supply them with proof and disclosure by certifying electricity generated from renewable energy sources, and to determine the procedures and principles for the indiscriminate, objective, transparent operation of this system.” The draft text on the regulation on renewable energy source guarantee certificate in the Electricity Market, which was declared to public opinion by EMRA on 01.07.2020, is an important step in the said alignment targets.
As it is known, every electricity produced is integrated into the national distribution network and it is not possible to know that which source of production the energy consumed after this moment. To exemplify, it is not possible to determine whether the electricity that allows watching TV in Istanbul is produced from the Keban Dam or whether it is produced at the wind power plant in Balıkesir. Renewable energy certificates called Guarantee of Origin, also known as Green Certificates; is thee documents that make it possible to determine the source of electricity consumed. In addition to providing consumers with a proven renewable electricity with the Guarantee of Origin, in this way, the green electricity demands of consumers who want to consume green electricity can be met as well as an additional return to renewable energy investors.
Certificates offering a guarantee of origin (Renewable Energy Certificate) is the name given to certification that records that one megawatt-hour of electricity is generated from a suitable renewable source and confirms which renewable energy sources supply electricity to the network is supplied from.
Guarantee of Origin, which is a voluntary system, is an effective and well-known tool that complies with the Greenhouse Gas Protocol Scope 2 Guide and is an effective and recognized tool for reducing greenhouse gas emissions and increasing the degree of sustainability, and is one of the important certification systems of the Renewable Energy Revolution. The main purpose of the guarantee of Origin is to provide proof when selling electricity to renewable electricity producers that the electricity they produce is produced from renewable sources, and to present it to the consumer.
The fact that Guarantee of Origin can guarantee that the consumer is avoided by double counting is another feature that makes this certificate preferable. Therefore, Guarantees of Origin appear as an electronic certificate. The electronic guarantee of origin certificates are based on multiple goals such as, providing an antifraud warranty, providing a manageable environment for managing numerous certificates (it is currently known that more than 60 million certificates are issued each year) and facilitating international trade.
The Certificate of Origin, which is referred to as Guarantee of Origin (GoO) in the international literature, is also expressed with concepts such as the Green Label. According to Article 15 of the European Union’s 2009/28 / EC Directive, the Guarantee of Origin System aims to “to provide electricity consumers with the determination of the source of the energy they consume, to increase the transparency and accountability, and to prevent repetition.”
As mentioned above, the Guarantee of Origin is a green label or monitor that guarantees the production of an MWh (megawatt-hour) electricity from renewable energy sources. In case a company receives a Guarantee of Origin Certificate, the guarantees of origin are cancelled in the electronic certificate register as documents relating to electricity delivered or consumed. The Guarantee of Origin, standardized by the European Energy Certificate System (EECS) provided by the Association of Issuing Bodies (AIB), ensures that property is monitored, requests are verified, and that Guarantee of the Origins are sold only once and no repetitions are made.
After nearly 20 years of progress, European Union has now adopted a standard (CEN EN 16325) that defines the qualifications of the Guarantees of Origin, as well as the processes related to the issuance, transfer, cancellation and termination of the Guarantee of Origin in a relatively clear, complete and original manner. The recently adopted European Union legal framework obliges member states to regulate their guarantees of origin according to this standard. The implementation is expected to make the guarantee of origin process uniform in member states (including member states that are not currently AIB members). Turkey’s adoption of a rule-making legal framework for origin guarantees with best practices such as the European Union’s legal framework (and CEN standards for electricity Origin Guarantees) will undoubtedly have significant advantages in developing an effective nationally active guarantee of origin market.
The first Sustainable Energy Resources (“SER”) Directive (Article 5) summarizes a Guarantee of Origin implemented with the 2001/77 / EC Directive accurately: Article 5 of the Directive defines the Guarantee of Origin, as “The energy source and production dates and locations from which electricity is produced are required to be included in a Certificate of Origin. Guarantees of origin in the directive for hydroelectric facilities should also specify the capacity of the power facilities.”
In the conversion of energy; demand management, storage, smart grids, more active participants with energy value chain democratized by self-production, and an increase of the diversity of tariff options, hedging opportunities increase, reduced energy costs and risk, contribution to energy efficiency and sustainability goals to the forefront of the global factors, such as the role of final consumers in the energy sector has been strengthened.
As a matter of fact, the 2nd SER Directive (2009/28/EC Directive) organized by targeting the final customer, specifically emphasizes accuracy and reliability, describing the Guarantee of Origin as follows: “A ‘Guarantee of Origin’ means an electronic document that only aims to provide evidence to the final customer that a particular share or amount of energy is produced from renewable sources as stipulated in Article 3 (6) of Directive 2003/54 / EC.” In the Second SER Directive, it is emphasized again that the sole purpose of Guarantees of Origin is to inform final customers that a certain energy share or amount is produced from renewable resources.
On the other hand, in accordance with the EU Acquis, published in the Official Gazette on March 8, 2020; “Regulation Amending the Regulation on Certification and Support of Renewable Energy Resources” it can be said that the relevant legislation has been harmonised with the EU by incorporating hybrid energy systems in the renewable energy sources regulation.
Considering in the scope of European Union legislation, the Guarantee of Origin is issued at the request of the electric manufacturer from the renewable electricity source. Therefore, Guarantee of Origin remains a voluntary mechanism. In addition, Guarantee of Origin is issued for a standard volume of 1 MWh. For each energy unit produced, at most one Guarantee of Origin is issued. Guarantee of Origin is issued within 12 months of the production of the relevant energy unit and canceled when used.
Within the framework of struggle against climate change, the goals for global transition to a low-carbon economy envisage a radical transformation that shall change people’s way of life, their way of production and manufacturing. Climate Neutrality, which is the goal of the European Green Deal, can directly affect energy policies, health and agriculture-related investments, the use of water resources, food security, growth strategies, transition to a low carbon economy and sustainable development goals not only in Europe but also in all countries of the world. International efforts under the roof of the United Nations focus on actions aimed at limiting global warming to a 1.5-degree increase. The Kyoto Protocol, which could be implemented in the period of 2005-2012 under the United Nations Framework Convention on Climate Change, has the legal ground that sets out the goal of “Green Economy” in Paris Agreement with the titles such as climate change reduction, Compliance and Technology Transfer, which are in practice as of 2020.
EVÇED president Mr. Dr. Oğuz Can in his presentation stated that: “As a dramatic and distressing evidence the Covid-19 process reveals with all its freshness that actually our world is not that big; a man shopping at the market in China’s Wuhan province, the people going to the match in Milan, Italy, the sugarcane farmer in Sao Paolo, Brazil, is connected to each other and we need to get along with nature.” subsequently his statements he used the words of “The transition to the new normal, not the strongest institutions and organizations, but the most adapted institutions and organizations can survive” emphasizing that “Green Recovery instead of Green growth”
The Sustainable Recovery Plan Report for the Energy Sector, prepared in June 2020 by Mr. Dr. Fatih Birol, the President of the International Energy Agency, is another example of the literature that we shall encounter more frequently in the literature. The International Energy Agency also recommended that governments integrate clean energy innovation into the heart of energy policies in its special Clean Energy Innovation Report, Energy Technology perspectives, dated July 3, 2020, aim to achieve net zero emissions while improving energy security.
Decarbonization, in other words- climate-neutrality. Climate neutrality, which means zero carbon, means that all carbon emissions must be balanced with carbon retention, the process of removing and storing carbon dioxide from the atmosphere, in other words zero carbon. Environmental problems such as climate change, global warming and carbon footprint have reached a level that cannot be ignored today. The biggest source of these problems is that companies release a huge amount of greenhouse gases into the atmosphere as a result of fossil fuel consumption. Within the framework of climate battle policies aiming a sustainable future, the European Union is targeting companies for the transition to a zero-carbon future with regulations such as the “Non-Financial Reporting” Directive that obliges companies to report on environmental issues. The Carbon Disclosure Project, with the official use of CDP (Carbon Disclosure Project), is an independent and international organization that both helps companies to reduce carbon emissions and provides useful information for investors to make the right choices by learning and sharing the magnitude of greenhouse gas emissions, which is the biggest cause of climate change and global warming.
By 2050, Europe aims to become the world’s first continent with climate neutrality. Also in our country, many companies are working to reduce carbon emissions and improve their sustainability contributions. Likewise, these companies publish annual sustainability reports under the guidance of the Global Reporting Initiative (GRI) and are included in the Sustainability Disclosure Database (SDD). Another important thing is that companies reporting on carbon emissions reduction operate in a wide range of sectors such as automotive, aviation, chemicals, commercial services, stone, construction, construction products, durable consumer goods, energy, equipment, financial services, food and beverage products, health products, health services, logistics, media, metals, various retailers, technology equipment, telecommunications, textiles and apparel shall also be potential customers of Guarantee of Origin System.
As a matter of fact, in the report, published in June 2020, which the International Energy Agency (IEA) called a rescue plan which is referred as IEA’s Sustainable Recovery Plan, while stressing the need to invest in energy to develop more sustainable systems, accelerate clean energy transitions and reduce emissions in line with the goals of the Paris Agreement and the UN Sustainable Development Agenda, it is also striking that the word emission has been used 48 times in the very same report. In addition to Turkey, the EU, America and all countries of the world agree on the importance of reducing the carbon footprint for sustainable clean energy in the 2023, 2030, 2040 and 2050 action plans targeting climate neutrality.
CDP 2018 Report begins as: “You can’t manage what you don’t measure,”. Based on this statement, it is necessary to underline that the determination and habits of all energy users, particularly large companies that cause carbon emissions in energy consumption, to provide energy supply with clean energy sources, and transparent resource sharing regarding which type of energy they use are vital in reaching the carbonization target.
Turkey, at this point, by fulfilling its responsibilities in line with the common goals agreed for a sustainable world and a clean environment, makes studies and arrangements without detriment, develops bilateral cooperation, and provides active participation in regional and international studies. In fact, the SER Certificates compliance legislation prepared is the legal expression of this effective participation. Although our country could not participate in the Kyoto mechanisms, it was found eligible for financing under the Green Climate Fund. According to the information published by the European Bank for Reconstruction and Development (EBRD); Turkey plays an important role in the global voluntary carbon market for carbon credits transactions, which are excluded from Kyoto compliance programs. Guarantee of Origin, as a result of Turkey’s policy of carbon neutrality and sustainability, Green Energy Certificates seen in our local legislation is one of reflection on the compliance of our country into the world of emissions trading.
According to the global study that prepared under the prepared under the “Sustainable Energy for All” heading, with energy conversion, Turkey has the potential to meet almost 40% of total final energy consumption from renewable energy in 2030 and this figure is estimated to be almost 3 times the share of renewable energy compared to today’s level. Turkey has an important SER potential especially in wind, solar and geothermal energy. When considering the decline in global trends and investments in renewable energy costs are expected to continue to increase renewable energy sources in Turkey.
Article 11 of the Electricity Market Law No. 6446 dated 30/03/2013, Article 5 of the Law No. 5346 dated 18/05/2005 of the Use of Renewable Energy Resources for the Purpose of Generating Electrical Energy and Regulation on Renewable Energy Resource Guarantee Certificate in the Electricity Market, which is opened to public opinion are the underlying legislation of the SER Guarantee Certificates, also called the Guarantee of Origin.
Article 5 of Law on The Use of Renewable Energy Resources for the Purpose of Generating Electrical Energy is a mandatory provision of “SER Certificate”. Accordingly, SER Certificate is defined as “The document issued by EMRA to the legal entities that are holding generation license for the determination and tracking of the type of source in the domestic and international markets of the electricity generated from renewable energy resources”. As can be seen, this definition also complies with the definitions submitted by the European Union.
Turkey does not have to go through a process of learning through experience in order to establish a national Guarantee of Origin. As we mentioned above, the European Union has been trying to improve its legislation on this issue for 20 years. This is an important opportunity for Turkey to make a more advanced legislation by taking advantage of the European Union’s past regulatory experience. The European Union Experience provides a good basis for the relevant rules to be developed in Turkey. Association of Issuing Bodies (AIB) has established all the necessary rules for the European Energy Certification System (EECS). These rules are detailed, well based and clear.
In fact, as stated at the beginning of the article, the aim set out and the legislative works for this purpose are also progressing in harmony with the legislation of the European Union. Turkey is taking firm steps towards completing the technical and legislative infrastructure needed to support a Guarantee of Origin in many stages.
Implementing institutions are also generally ready for the process. EMRA regulates production licenses, so that in principle the existing system can be expanded to serve as a production registration agency. EPİAŞ successfully carries out electricity and gas wholesale markets. There is already a communication mechanism between EPİAŞ and EDAŞ, Distribution System Operators. EPİAŞ’s very important and successful activities such as domestic software and transparency platform shall strengthen the Guarantee of Origin.
Paragraph (m) of the 4th article of the Draft of the Renewable Energy Resource Guarantee Certificate Regulation in the Electricity Market is the mandatory provision and defines the contract that obliges the delivery or delivery of the SER-G certificate at the matching price in the Organized SER-G market. In near future, it is expected that these certificate purchases shall be made through smart contracts through Blockchain technology. As such, Blockchain, which is a secure database, is basically suitable for monitoring the source of electricity compared to other vehicles with the classic record chain model. As a matter of fact, we believe that the preference of EPİAŞ among the regulatory agencies in our local legislation is that the database and its technological infrastructure are the most prone to Blockchain technology.
Recently, the systems that encourage participation are defined as the new power, the main feature that separates Blokchain from other technologies is its need to work collectively with the cross-sectoral cooperation platforms it brings with it. As a new trend, Blokchain is well suited to the structure of the emissions trade, while aiming to highlight ecosystems that can achieve value together rather than individual companies or products.
The majority of countries that adopt the Guarantee of Origin retain the records for 10 years (Norway is known to retain certain records for 25 years.). Objections to the accuracy of the recordings may be the subject of complaints. We believe that Administrative Jurisdiction shall cover any disputes arising before administrative institutions regarding the accuracy of the records. In fact, Article 18 of the Draft Regulation, which shall come into force on 01/01/2021, regulates the objection processes in the Organized SER-G market.
The SER-G bilateral agreement defines the commercial agreement between the system users regarding the purchase and sale of the SER-G certificate subject to the provisions of the private law and which is not subject to the Board approval. In this context, it is necessary to specify that the potential conflicts between the users of the system shall be subject to the provisions of private law. In our country, which wants to be an energy trade center, it is also necessary to consider that specialized courts for energy disputes should be established within this framework and at the point of resolution of similar disputes. In fact, if a provision is made in the contract on the resolution of such disputes through mediation and arbitration, the disputes in question may be resolved with expert mediators or the arbitrators to be appointed in this field.
While in the midst of the world’s great renewable energy revolution, Turkey electric vehicles, smart cities, energy storage, battery and hydrogen infrastructure, tariffs, Carbon Capture and Reuse, Energy Efficiency, Hybrid Resources, Producing Consumers, Blockchain, Vehicle-to-grid (V2G) well-to-wheel emissions values and the renewable revolution the legislation has rapidly completed its infrastructure and continues its regulations on a number of issues consistent.
When we consider who would be potential customers of Guarantee of Origin in Turkey, conducted by former Renewable Energy General Directorate in 2017 “Green Power Research”, according to the results, 96% of the top 500 industrial companies in Turkey (ISO 500 list) would prefer to use green electricity. In addition, 21% of these companies would prefer green electricity even if it is more expensive than the standard electricity price. Commercial consumers (ISO 500 list), power generation companies (renewable), electricity supply companies are the potential customers and in the profile of companies in the ISO 500 list, refineries, automobile manufacturers, iron, steel, alumina and copper industries, cement industries, shipyards, electronic home appliance manufacturers, chemical and pharmaceutical industries, food industries, textile, fertilizer, etc. sectors are included.
As a matter of fact, we would like to state that International players as well a global trend increasingly to develop their awareness as to the environment, more than 150 companies, including also found that national company in Turkey, robust sustainability commitments and potential targets for achieving a specific SER percentage of electricity consumption by 2025.
Especially sectors such as large hotel chains, universities, research institutes, public administrations, municipalities, international corporations, tourism and travel, telecom and Technology, Food and beverage, consumer products companies in many different sectors where products originating in Turkey are exported to European countries or the United States are potential Guarantee of Origin customers.
Steps to be taken regarding the Guarantee of Origin and, all final users, from industrial enterprises to domestic consumers, who shall go towards this tariff, even its more expensive, shall have a significant share in the way the world and our country are heading towards the zero carbon target.