Green electricity certificates in flanders: The gradual extension of a market-based mechanism and doubts over its cost-efficiency

Abstract

At the time of its introduction in 2002, the Flemish system to support renewables was a pure market-based green electricity certificate system. Starting in 2004 a string of changes to the system, up till the current year 2013, culminated in the addition of a minimum allowance for green electricity certificates. This minimum allowance presents a minimum market price for green electricity certificates. The gradual transformation of the system took place as a consequence of a series of policy responses to imperfections of the system as perceived by policy makers. In our analysis, we investigate whether the system has been effective and efficient in reaching its goals. We focus on four consequences of the system's structure: three related to the aspect of minimum allowances (the time-lagged nature, the technological orientation and the differentiated rights for technologies) and one related to the market-based green certificate aspect (the short-term target setting by limited annual quota increases). At present Flemish renewable targets have been reached, thus the system seems to have been effective but there are doubts about its efficiency. Whether the current form of the system will still be effective in the future, so that Flemish renewable energy targets can be met, and whether the system will turn out to be efficient, is as yet undetermined. © Springer-Verlag London 2013.