Concerns regarding climate change and related effects have made climate change mitigation an increasingly important issue. As the energy supply sector contributes to more than half (56.6%) of global greenhouse gas (GHG) emission, it also plays an important role in ensuring reduction of those emissions. Global electricity supply represented 15% of the total primary energy supply in 2008. As 68% of the electricity supplied was based on fossil energy sources, the amount of total primary energy required for electricity generation in 2008 accounted for 35% of the global primary energy supply. Electricity generation thus plays an important role within the fields of global primary energy demand and energy related GHG emissions.
Electricity as a product has traditionally been supplied through homogeneous markets as it is impossible physically to distinguish between two different units of electricity taken from the grid. When Guarantees of Origin (GO) and Electricity Disclosure were respectively introduced, in accordance with the European Renewable Energy Directive (Directive 2009/28/EC) and Electricity Market Directive (Directive 2009/72/EC), a system allowing informed consumer choice not only based on electricity prices, was established. Thus, consumers can demand electricity based on the electricity’s environmental attributes, such as origin and greenhouse gas (GHG) emissions.
This thesis attempts to describe how GHG emissions from electricity generation can be allocated to customers who are willing to pay an additional price for renewable electricity in order to improve the environmental profile of their own business, products and/or services. The thesis also documents ranges of GHG emissions from wind and hydropower generation when taking a life cycle perspective, as this information is significant for environmental reporting. Life cycle assessment (LCA) methodology has been used to assess GHG emissions throughout the value chain of electricity generation. LCA methodology has also provided the basis for the work on how voluntarily purchased electricity instruments should be claimed in environmental reports.
The research has its empirical basis in detailed studies of energy use and GHG emissions data from LCA studies of electricity generation, with main focus on how emission factors per kWh generated vary between different technologies, plant capacities and methodological assumptions. On this basis, more specific and homogenous sub categories of electricity technologies with related GHG emissions can be further developed and applied for trading purposes. Since a Guarantee of Origin (GO) represents both a tracking instrument for proving the origin of electricity and a contractual obligation between suppliers and customers, the related environmental attributes, such as GHG emissions, should be claimed in environmental reporting. It is also shown that the voluntarily purchase of GOs, working in parallel with mandatory Tradable Green Certificates (TGCs), may implicitly impact the total generation capacity of electricity from renewable sources by leading to increased TGC targets. Changes in renewable electricity generation might therefore be induced both by mandatory and voluntary markets working in parallel
