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Environmental sustainability with electricity


In recent years the negative effects of pollution, the most concerning of which is certainly the gradual increase in the earth’s temperature (the greenhouse effect), have contributed to highlighting environmental problems linked to industrial production and in particular the emission of climate-altering gases, the most significant of which is carbon dioxide.

There are basically two methods for limiting climate altering-gas emissions within a context of industrial production development: proposing energy production mechanisms that are higher performing from the environmental standpoint, and using the energy produced in a more efficient manner.

The first objective is pursued by developing production plants that rely on renewable sources or which use fuels characterised by limited emissions (for example, using natural gas instead of coal or fuel oil as fuel for thermal and thermoelectric power plants). The main instruments developed to support these policies are green certificates, to support the spread of renewable energy plants, and grey certificates, based on the implementation of a market in which CO2 emission shares can be traded.

The second objective is pursued by incentivising policies for overall heat and electric energy savings, and therefore by developing mechanisms intended to support investments in the use of more energy efficient devices (for example, low-consumption rather than incandescent lamps) or in works meant to limit heat consumption (e.g., building insulation or window and door replacement).

In this case the incentive mechanism consists of white certificates, which place on a value on the energy savings that can be obtained from these initiatives.

All of the HERA Group’s policies in the three key sectors, i.e., the economy, society and the environment, are gathered together in the Sustainability Report, in which economic, social and environmental performance is monitored and compared and ensuing improvement initiatives are planned.

 

Grey Certificates

In practice, each business is assigned emission certificates that establish the maximum quantity of carbon dioxide it can emit into the atmosphere.

Each company therefore has the “right” to emit CO2 up to that threshold. Obviously, some businesses will surpass their limit, while others will remain below theirs. Each company that produces less carbon dioxide than it has been assigned is entitled to sell its excess emission rights to another company that may have surpassed the limits imposed on it.

In this manner, a veritable emissions market is created based on the emission trading mechanism.

Green Certificates

The most well-known renewable energy sources are surely water, wind and sun, but they also include geothermal energy, biomass and the tides.

Renewable energy sources are different from fossil fuels like oil, natural gas and coal because they are clean, sustainable and secure. Clean: because they allow for the production of energy with an extremely low environmental impact. Sustainable: because aside from reducing pollution, they are also renewable and therefore cannot be depleted. Secure: because they allow for the reduction of energy imports, therefore diminishing our dependence on events that are outside of our control.

Italy and the European Union have introduced incentives in order to increase the spread of this type of energy, as the production of energy from renewable sources is more costly than the use of conventional sources and is therefore inefficient from a strictly economic perspective. This is how green certificates were born.

Based on this incentive system, operators that produce electricity from conventional sources or import it into Italy must inject a minimum percentage of electricity from renewable sources per year into the grid, in proportion with the energy injected, and broken down into “units” of defined value.

For each “unit” of clean energy produced, a green certificate is issued. Operators that do not reach the clean energy production objective established by law are required to purchase the certificates in the market. Therefore, they purchase the excess green certificates held by more virtuous companies. The purchases may take place through bilateral contracts or through a dedicated market which functions in a manner similar to the stock exchange.

White Certificates

The incentive mechanism developed to seek to increase energy savings, called the Energy Efficiency Bonds or White Certificates market, was introduced in 2005.

Indeed, provisions of law require electricity distributors and energy service companies (Esco) that had at least 100,000 end customersat 31 December 2001 to pursue energy saving objectives. Companies that engage in energy consumption reduction projects in line with the objectives established by the Authority for Electricity, Gas and Water will receive a number of white certificates from the market operator in proportion with the savings achieved.

On the other hand, companies that are not able or do not want to develop energy consumption reduction projects will have the possibility of fulfilling their obligations by acquiring white certificates from other companies. This purchase may take place through bilateral contracts and on the Energy Efficiency Bonds Market, which operates in a manner similar to the stock exchange.

In the national ranking of obligations for the “production of EEBs”, INRETE Distribuzione Energia S.p.A., in previous years HERA S.p.A., is positioned as follows with respect to the overall figure, considering that the quantities of energy distributed in 2014 count for 2016:

  • 2014: 87,944 TOE, 18th place, third in energy operators (traders and/or distributors);
  • First 10 months of 2015: 57,479 EEBs, 14th place, third in energy operators (traders and/or distributors).

In 2013 and 2014, INRETE Distribuzione Energia S.p.A., previously Hera S.p.A., covered roughly 50% of its obligations directly and acquired the remainder in the market. The percentage of coverage relating to 2015 is currently being defined.

 


Page updated 24 July 2019

 
 
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