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Title:
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Renewable electricity obligation of the Netherlands - exploration of possibilities and constraints
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Author(s):
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Published by:
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Publication date:
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ECN
Policy Studies
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9-3-2007
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ECN report number:
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Document type:
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ECN-E--06-038
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ECN publication
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Number of pages:
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Full text:
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36
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Download PDF
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Abstract:
In August 2006, the MEP feed-in system was suspended to prevent excess budget claims while the 2010 target is expected to be met. A number of politicians suggest the time is right to change the feed-in system to an obligation scheme. On assignment of the Dutch Ministry of Economic Affairs ECN has reviewed whether The Netherlands could be ready for a successful introduc-tion of an obligation-based support scheme for renewable electricity in the Netherlands. This report is not a detailed study, but offers a survey of possibilities and preconditions.
The question whether The Netherlands is ready for a successful introduction can be yes only when two conditions are met. Firstly, the government has to pursue a strategy of long term pol-icy stability, essential for establishing a favourable investment climate. Secondly, a certificate market has to be set up that is able to function properly and efficiently (i.e. sufficient market li-quidity).
Excessive producers’ surplus, under certain circumstances a side effect of an obligation based system, may be reduced using a hybrid approach combining direct subsidies and a quota obliga-tion. This report describes that careful planning is required and hence a possible switch cannot be implemented before 2009 or 2010.
The government plays an important role in establishing a positive and stable investment climate. At the introduction of an obligation based scheme, the government should present an ambitious and broadly supported long term target. Commitment to maintain the obligation for at least fif-teen to twenty years ahead is of key importance. In addition to a stable investment climate, it is also important to have a sufficiently transparent and liquid market for tradable green certificates. Whether this is achievable in the Netherlands remains open to investigation. The government has limited means at its disposal for providing sufficient market efficiency.
Harmonisation of support schemes at the EU level is not to be expected in the short term. Al-though trading certificates between countries may result in a situation of mutual benefit, politi-cal economic constraints limit the possibility to cooperate. It is recommended to first start by focusing on a successful scheme at national level and then reconsider cooperation with for ex-ample Flanders or Sweden.
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