Pros and cons in implementing Guarantees of Origins

As businesses become increasingly carbon-conscious, they are seeking effective ways to bolster their sustainability credentials. One approach is the adoption of Guarantees of Origin (GOs), a certified method for verifying renewable energy consumption. Certified by the EU, these Guarantees assure that for every 1 MWh of energy consumed, a corresponding Guarantee of Origin is issued, providing measurable sustainability outcomes.

We look at the benefits, challenges, and opportunities of integrating Guarantees of Origin in business operations and their crucial role in renewable energy certification.

Challenges in implementing Guarantees of Origin

While the benefits of Guarantees of Origin are evident—offering businesses a verifiable means to prove renewable energy consumption—several challenges can hinder their widespread implementation.

1. Regulatory and legislative barriers

As the renewable energy sector grows, regulations governing Guarantees of Origin are frequently updated, making compliance complex. However, evolving directives, such as the EU’s Corporate Sustainability Reporting Directive (CSRD), may boost the adoption of GOs by making sustainability reporting mandatory. GOs can play a pivotal role in helping businesses meet these new reporting requirements.

2. Lack of standardisation across regions

Currently, Guarantees of Origin are exclusive to Europe, while other regions implement their own renewable energy certification programs. Unfortunately, these certifications are often incompatible across borders. While such localised schemes encourage regional investment in renewables, the lack of global standardisation limits their scalability and integration.

3. Integration with existing energy systems

The integration of Guarantees of Origin into legacy renewable projects poses another hurdle. Many early-stage renewable energy initiatives benefited from government subsidies, which are now phasing out. While GOs offer a potential revenue stream for these projects, certain global frameworks—such as RE100—only recognise Guarantees of Origin from plants less than 14 years old, limiting their eligibility.

Pros for implementing Guarantees of Origin

Despite the challenges, several opportunities exist to improve the adoption and effectiveness of Guarantees of Origin.

1. Harmonising global regulations

To facilitate the global energy transition, renewable energy certifications must be internationally transferable. Presently, Guarantees of Origin can be exchanged across EU member states and within the Association of Issuing Bodies (AIB). However, non-EU countries, such as Romania, have introduced independent certification schemes to stay competitive. Similarly, the USA faces regulatory fragmentation, with certain states like Texas allowing limited REC (Renewable Energy Certificate) exports.

2. Raising awareness among consumers and businesses

Increasing consumer and corporate awareness of Guarantees of Origin is crucial. By promoting transparency in sustainability efforts, GOs empower businesses to showcase their commitment to renewable energy, fostering trust among stakeholders. Educating consumers on the benefits of GOs can also drive demand for sustainable products and services, encouraging broader adoption.

Regional focus: overcoming implementation challenges

While global standardisation remains a work in progress, there are valuable lessons to be learned from regional initiatives.

Successful GO implementation in specific regions

In North America, Guarantees of Origin are known as Renewable Energy Certificates (RECs), which are tracked through regional registries. There are currently ten registries across the USA and Canada, offering limited cross-state compatibility. Meanwhile, Japan has been running a national certification program since 2000, featuring a diverse renewable energy portfolio, including hydro, wind, solar, geothermal, and biomass energy. In contrast, countries like Vietnam and Thailand primarily focus on solar and wind energy.

Lessons from policy and industry efforts

The EU’s Fit-for-55 policy, aimed at reducing greenhouse gas emissions by 55% by 2030, presents a promising framework for renewable energy certification. This initiative could potentially generate tens of billions of Euros for renewable energy plants, highlighting the economic benefits of enhanced GO adoption.

The future of Guarantees of Origin in renewable energy

The future of Guarantees of Origin depends on their ability to provide transparent, reliable information, enabling consumers and investors to make informed choices about renewable energy consumption.

Emerging trends in GO adoption

A key trend in the GO sector is the increasing availability of 100% renewable energy packages from utility providers. These offerings appeal to environmentally conscious consumers seeking carbon-neutral energy solutions. Additionally, the growth of Power Purchase Agreements (PPAs), where Guarantees of Origin are integral, is expected to continue, with emerging flexible options like floating and hybrid PPAs gaining traction.

How do GOs support a sustainable energy market?

Innovations such as Granular Guarantees of Origin are set to revolutionise the certification landscape. Unlike traditional Guarantees, which track annual compliance, Granular GOs provide half-hourly timestamps, enabling businesses to monitor renewable energy usage in real time. This advancement enhances transparency and could increase market competitiveness, driving further investment in sustainable energy.

Guarantees of Origin play a critical role in advancing the renewable energy transition by fostering transparency and accountability in energy consumption. Despite regulatory and integration challenges, synchronising standards, educating stakeholders, and embracing emerging trends can accelerate GO adoption, contributing to a sustainable global energy market. As businesses and consumers increasingly prioritise sustainability, the demand for reliable renewable energy certifications like Guarantees of Origin will continue to grow.