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Ecolabel for renewable electricity

Percy Shum's picture
business school faculty Chu Hai College of Higher Education (Hong Kong)

Kwok Shum is a business school faculty based in Hong Kong, His interests are in policy and innovations to facilitate energy transition.

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  • Apr 2, 2021
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The Strategic Design of an Eco-label for Renewable Electricity

By Kwok L Shum April 2nd 2021

What is an eco-label? An eco-label certifies and identifies products or services proven environmentally preferable overall, within a specific product or service category. The roots of eco-label are found in the growing global concern for environmental protection on the part of governments, businesses, and the private citizens. Surveys have consistently shown that consumers citizens, if given choice, are willing to purchase products, even at a premium. Eco-label is therefore an information tool or even a policy which could be harnessed to mainstream the environmental protection movement.

An Eco-label case study: FSC certified wood In 1993, 130 representatives of environmental organizations, lumber companies, forest product retailers, indigenous peoples’ groups, forestry certification groups, and scientists from around the world gathered to create the Forest Steward Council (FSC). They formed FSC to promote sustainable forest management to protect fragile ecosystems, ensure long term availability of forest resources, empower indigenous people to reap the benefits of their forestlands, and maximize the economic value of the forests within the contexts of environmental and social goals. FSC certification gave consumers the opportunity to choose wood products generated from a sustainable forest, FSC codified a standardization and certification process to certify third-party independent certifiers rather than directly certifying forests and forest products. In addition to a broadened scope of the founding assembly, FSC also provide “chain of custody” certification to authenticate the wood as it moved from forest to mill to manufacturer to the end consumers.

What could we learn for the certification of renewable electricity? Renewable electricity is electricity generated from renewable energy resources. On the other hand, electricity generated by burning coals or even natural gas are non-renewable electricity as both (coal and natural gases) resources are only renewable at the time scale of hundreds of millions of years. We could not count on their replenishment “fast enough” to power our ever-growing population, affluence, and energy appetite. On the other hand, solar or wind are solar “income” as they are with us as long as the sun is shinning in real time. To the extent that we could harvest solar and wind and convert them to electricity, we could avoid the burning of coal and natural gases and the Greenhouse Gases (GHG) by-products causing global climate changes. It is however a misconception to believe that solar or wind generated electricity is 100% clean. While the operation and energy conversion process would NOT give out GHG emissions, the manufacturing, distribution, or even disposals of solar panels, wind turbines DOES give out GHGs. Therefore, a lifecycle assessment of different renewable electricity generation technologies could be included and be part of a renewable electricity eco-label to inform potential consumers or purchasers not all renewable technologies are the same and they could be assessed of their carbon footprint over their lifecycle.

Second, while life cycle assessment could capture the environmental impacts of renewable electricity, electricity generation is an economic activity and could be assessed in terms of the number of jobs they could created locally. In China, e.g. the Gov’t is espousing using solar photovoltaics (PV) for poverty alleviation in rural China. It could be argued that PV electricity generated by peasants have socio-economic development value other than that those “electrons” are green. This socio-economic value could be “internalized” into the market or retail value of the renewable electricity. The eco-label for renewable electricity is therefore suggested to be multi-criteria beyond a single criterion of “green.”

Last but not the least, this multi-criteria certification framework for renewable electricity could also certify the "localness" of a clean electron.  Massive generation of renewable electricity due to incentives such as feed-in-tariff results in excessive generation and results in curtailment as such electricity could not be exported to the grid due to technical and political reasons.

This curtailed electricity has no economic values. As a result, the eco-label could also be designed to certify the local-ness of the source of renewable electricity as such electricity could minimize “clogging,” “congestion,” or disruption of the electricity grid, from a technical and engineering perspective. In some jurisdictions in China such as Gansu and Xinjiang, the renewable curtailment rate was a high as 30+ % (Deign Nov. 2017). An analogy to certify the localness of a clean electron can be found in the sustainable food sector in which locally produced food or produces could avoid the infamous "food miles." 

Concluding: the technology of renewable energy in the supply side is improving day by day in terms of costs improvement and Research and Development progresses. It is important to prescribe that the demand side needs similar rapid actions and policies to mainstream renewable generated electricity. A suitably & comprehensively designed eco-label for renewable electricity is an important framework & policy tool at the demand side (beyond feed-in tariff or auctions) to facilitate the urgently needed Energy Transition to promote low carbon and social economic development while minimizing technical instabilities to the electricity grid.

Corporate purchasers of such certified electricity promotes their corporate social responsibility (CSR) agendas and aids a multitude of beneficiaries. It is the kind of synergies we need for sustainable development of society. The challenge is of course the analytical expertise to support the multi-criteria certification of renewable electricity. This remains a good opportunity for Material Stakeholders such as Utilities, independent power producers, NGOs, scientific bodies, and other entrepreneurs to cooperate, contribute, and arrive at a practical consensus and standard. 

 

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