The Swedish and Norwegian authorities are considering the practicality of a common Nordic market for green certificates (renewable energy certificates). A green certificate system is a market-based approach to increasing renewable energy production and consumption. In Sweden, green certificates were put into effect in May 2003.

The green certificate system has its background in the EU Renewable Energy Directive, which sets targets for renewable energy consumption in the member states. As green certificates may be used in international trading and the Nordic countries have already established a common electricity market, one might think that such a market should include common trading with green certificates.

So far, only Sweden has implemented such a system and the scheme is not open for import. Denmark has developed a system that has not yet been put into effect. In Norway, the government is considering whether to prepare a proposal for a domestic system that follows the Swedish system.

The Norwegian authorities consider that an obligatory green certificate market is unlikely to be established until 2006, due to the substantial legislative work and political discussions that are necessary at both the domestic and Nordic levels.

One aspect the Norwegian authorities must decide upon is whether green certificates are to be financial instruments. Other factors that may hinder the creation of a well-functioning market include unreliable price signals, uncertain unconditional frames and political risk.

As the government does not plan to introduce a green certificate scheme until 2006, there are fears that investment in renewable energy will dry up in the meantime. The state-owned company ENOVA has suggested that the state should buy green certificates from 2004, in order to speed up the development of renewable energy sources. According to this proposal, the state will be obliged to buy green certificates over a period of 10 years, with the aim of selling them to the energy market when the obligatory green certificate system is implemented.

Irrespective of temporary measures, the Swedish experience of its green certificate scheme is of great importance to Norway. According to the Norwegian government, cooperation with the Swedish authorities will be the decisive factor in developing a Norwegian green certificate scheme and eventually a Nordic market.

The Norwegian government has promised to present a more defined plan to the Norwegian Parliament in Spring 2004. Intermediate measures are likely to be presented with this plan.

For further information on this topic please contact Kristin Bjella at Haavind Vislie by telephone (+47 22 43 30 00) or by fax (+47 22 43 30 01) or by email ([email protected]).