Fuel Mix Disclosure
European Internal Markets Electricity (IEM) Directive 2019/944/EC of the European Parliament and of the Council (and its predecessors) liberalises the electricity market across the member states of the EU, creating a framework for a common market for electricity.
The Recast Gas and Hydrogen Directive provide a similar framework for regulating the internal gas market.
The IEM Directive requires Member States to introduce "electricity source disclosure" schemes for electricity sold to final consumers. This refers to information an electricity supplier is bound to display on its invoice, with regards tothe contribution of each energy source to the overall fuel mix of the supplier, and inform consumers of the environmental impact. It requires a means of allocating electricity generation "attributes", such as fuel type, CO2 emissions etc, to electricity suppliers and their customers.
For non-electrical energy carriers like hydrogen, gas, heating and cooling, the legislative framework for disclosure is not yet equally elaborated.
Disclosure of the origin of electricity towards consumers
Currently, each electricity supplier is obliged to disclose to its customers the energy origin of all electricity sold (2018/2001/EU, Article 19.8; 2019/944/EU, Annex 1.5). In most countries typically this information is only based on cancelled guarantees of origin for the share of electricity that is explicitly sold as originating from renewable sources. The origin of the remaining supply is covered by the residual mix. The need for a residual mix stems from the fact that electricity disclosure is mandatory for all electricity sold, but GOs are typically only for part of the volume, namely the renewable part. Detailed Best Practice Recommendations for disclosure are elaborated by the RE-DISS project.
Disclosure of the origin of gas towards consumers
Annex 1.5 of the recast gas directive, regulates similarly for supply of gases.
Also, the policy instruments used by Member States to support electricity from renewable energy sources and high efficiency cogeneration (e.g. feed-in tariffs, quota obligations, tax exemptions etc.) may require similar allocation of electricity attributes.
The implementation of such "tracking" systems for electricity can also facilitate the promotion of renewable energy sources and high-efficiency cogeneration in the internal market for electricity; and harmonising these across Europe is vital to the development of the internal market.
As it is not feasible (or desirable, for good economic and operational reasons) to physically connect consumers to producers of the type of energy they want, suppliers must track the electricity from producer to consumer independent of the physical flow of electricity. They can do this:
- By referring to the production mix of energy of their country. However, this ignores international trade, so the resulting statistics are wrong. Also, it prevents suppliers from developing a differentiated mix or products based on the origin of supplied electricity (from renewable energy sources, for example)
- By tracking the energy contracts. This is not easy, and takes a lot of effort, as electricity may be bought and sold several times before it is supplied. Also, equal amounts of energy from different types of technology may be swapped, resulting in different flows of energy and the 'environmental benefit'), or
- By certification. This provides a simple and effective way of administering disclosure: once a certificate has been issued for 1MWh produced, all the supplier has to do is to count the certificates it has been awarded or has acquired, for each source.
Directive 2018/2001/EC (including its updates in 2023, and its predecessors 2009/28/EC and 2001/77/EC) and 2012/27/EC create a framework for the promotion of energy from renewable energy sources (RES), and high-efficient cogeneration based on useful heat demand. These Directives contain regulations on Guarantees of Origin which serve to enable producers to demonstrate that the energy they sell is produced from renewable energy sources or highly-efficient cogeneration.
Such Guarantees of Origin provide an efficient and simple means of facilitating disclosure.
In addition, Label Schemes have developed which impose additional conditions upon supplied energy, making use of the standard information held on Guarantees of Origin, supplemented by an indication that this energy qualifies under a Label scheme, perhaps due to plant specifics; or because the Label scheme is operated so as to encourage the building of new plant. Examples of Label schemes include EkoENERGY, TUV SUD Generation EE and Naturemade.