Green Energy Purchasing Programs
Summary
As a part of efforts against climate change, these programs encourage buyers to voluntarily choose green energy when procuring electricity, heat, and fuel. "Green energy" refers to electricity, heat, and fuel produced from natural sources, such as solar, wind, hydro, and biomass. Paying attention to the demand side, local governments are promoting green energy purchasing locally, in order to expand the use of green energy in products and services, through the exchange of the environmental value added in electricity procured from natural energy (sourced through green power certificates and so on). Examples include local governments' own purchasing of green energy, and their assessing of performance based on desired ratios of renewable energy usage.
Local governments are also promoting information exchange and conducting publicity work based on green energy partnerships with public-private collaboration. Local governments generally use one of two main approaches when using a competitive bidding process to procure electricity. One approach, used by the Tokyo Metropolitan Government, requires bidders to ensure environmental value based on the total of a certain percentage of natural energy use plus green power certificates. The other approach, used by Kanagawa Prefecture, screens potential bidders by using a comprehensive evaluation that scores them on their CO2 emission coefficient and a rating for certain environmental consideration categories.
Examples
Tokyo Metropolitan Government
When announcing tenders, the Tokyo Metropolitan Government (TMG) stipulates in its green purchasing policy that electricity procured must have a CO2 emission factor of no more than 0.392 kg-CO2/kWh, and that bidders must assure that the environmental value of the electricity will include the equivalent of at least a total of 5% from renewable energy under the “renewable portfolio standard” (RPS) law, green power certificates, and so on. To meet these conditions when purchasing green energy for the TMG’s facilities, the TMG can procure the low-emission-factor electricity and the environmental value from a different business. Successful bidders are also required to prepare an “Environmental Value Assurance Specification Report” that provides the details on environmental consideration regarding the assurance amount of environmental value. In the context of electricity deregulation in Japan, by requiring a certain amount of renewable energy use as one criterion when selecting electricity providers, the Tokyo Metropolitan Government is aiming to make energy greener—not only by expanding the electrical power companies’ use of renewable energy, but also by a variety of other approaches such as tender processes, energy service company (ESCO) businesses, and citizen participation. The city is also considering schemes to promote green heat and green fuel in the future.
Tokyo Metropolitan Government’s website for green energy purchasing (New window will open.)
Kanagawa Prefecture
To encourage electrical power companies to consider the environment, Kanagawa Prefecture has since fiscal 2006 applied conditions relating to CO2 emissions when using a tender process to procure electricity for prefectural office buildings. For all prefectural agencies that use tender processes for procurement, in fiscal 2008 the prefectural government started applying a framework that requires prospective bidders to participate using a comprehensive scoring approach, which gives preference to utilities that are proactively tackling climate change. This “Kanagawa Prefecture Green Purchasing System for Electricity” sets out the methodology to assess the environmental consideration of electrical power companies. It gives a maximum of 60 points for a company’s CO2 emission coefficient of the previous year, and maximum of 40 points for “environmental consideration items,” such as the status of utilization of unused energy, and the use of renewable energy. It assigns a high score of 20 points for the purchase of green electricity certificates for power generated within the prefecture, in an effort to promote solar power generation and the like within the prefecture. The score (maximum 100 points) is calculated to rank bidders in one of three categories, which determine whether or not they are eligible to participate in bidding, as well as for what they are able to bid. This system differentiates between electrical power companies based on their environmental consideration. Rank I companies (70 points or higher) are qualified to bid on all electricity procurement contracts of prefectural agencies, Rank II companies (from 60 to below 70 points) can bid on procurement contracts up to 2,000 kilowatts, and Rank III companies (below 60 points) are not qualified to bid.
Kanagawa Prefecture Basic Guidelines for Green Purchasing (New window will open.)
