Author: Noah Bucon

Noah Bucon is the Regulatory Affairs Manager on 3Degrees’ Market Intelligence Team where he focuses on ensuring the integrity and impact of 3Degrees’ participation in global renewable energy and carbon markets.

Guarantees of Origin: An option for renewable energy in Europe

europe street

Since the World Resources Institute (WRI) unveiled new guidance for Scope 2 emissions accounting within the Greenhouse Gas Protocol Corporate Standard back in 2015, there has been an increased focus on global energy purchasing, with more organizations looking for options across the globe.  

Guarantees of origin

One such option is the Guarantee of Origin (GO), a voluntary renewable energy product that is used to claim consumption of renewable energy in Europe. A GO represents one megawatt hour of electricity from a renewable resource. Similar to a REC in the U.S., a GO represents the environmental attributes (but not the power) associated with renewable energy. Although all European countries are required to use GOs to track renewable energy consumption, not all have joined the Association of Issuing Bodies (AIB), which ensures adherence to best practices and market rules.

In countries that have joined the AIB, the European Energy Certificate System (EECS) certifies and registers each GO, preventing double counting and identifying the source of the GO and the method of production. In some countries, GOs may also be used to track renewable natural gas as well as some nonrenewable resources, so it is important to specify the type of GO desired when procuring these instruments. GO certificates are viable for 12 months from the date of issue.

Guarantee-of-origin-features

Regulatory considerations

The European voluntary market is well defined with clear norms of transparency and accountability. However, there are some complexities to the market that are important to understand. Although the EECS system creates rules around the creation and transfer of GOs, there are some country specific rules that can impact customers, specifically around project eligibility and GO cancellation. Although Europe is considered to be a single market, GOs are intended (where possible) to be cancelled in the GO registry of the country in which renewable energy claims are made. Due to a patchwork of trading/cancellation restrictions across the continent, this requirement can add administrative complexity for companies with operations in multiple countries. 3Degrees works closely with our clients to help them navigate the logistics of making EU-wide renewable energy claims in line with market rules.

AIB-members-2020

Note: As of Q1 2020, Latvia, Montenegro, and Portugal are in the process of applying to join the Association of Issuing Bodies (AIB).

Interested in learning more about global renewable energy options? Read our blog on Navigating the Opportunities and Pitfalls of International Renewable Energy Markets or this case study on how Verisk is successfully addressing emissions from its global energy load.

Exploring I-RECs: A renewable energy option in international markets

wind turbines in Asia

In 2015, the World Resources Institute (WRI) unveiled new guidance for Scope 2 emissions accounting within the Greenhouse Gas Protocol Corporate Standard. This update introduced a market-based accounting mechanism that gives companies the opportunity to reduce their Scope 2 emissions through the purchase of renewable energy certificates, PPAs, and other contractual instruments. This provision has driven a new focus on global energy purchasing, with more organizations looking for options across the globe.

Product Profile

The I-REC, an international renewable energy certificate, represents transferrable proof that one MWh of electricity was produced from renewable energy sources and added to an electrical grid. Purchasing an I-REC allows the buyer to claim consumption of one MWh of renewable energy. I-RECs can originate from wind, solar, ocean energy, biomass, hydropower, landfill gas, aerothermal, geothermal, and landfill gas projects. 3Degrees only transacts I-RECs issued in countries authorized by the International REC Standard and traded on the I-REC Registry. This standard establishes rules and regulations for a transparent system that simplifies claims and eliminates double counting issues, making products compliant with Scope 2 reporting guidelines. Valid renewable energy claims also depend on additional factors, such as whether production and consumption occur within an appropriate market boundary.

Regulatory Considerations

In some cases, the I-REC Secretariat implements country-specific restrictions on certificate issuance to ensure environmental integrity and prevent double counting. For example, issuance would be prohibited for generation that is counted toward a state-mandated renewable energy delivery quota. Every country’s regulatory environment is unique, and even though a policy may not lead to double counting, it may nonetheless change the scope of claims an I-REC purchaser can make. 3Degrees’ Regulatory Affairs team reviews each country in which I-REC issuance is authorized to comprehensively understand and communicate the integrity and impact of our clients’ I-REC purchases.

Interested in learning more about global renewable energy options? Read our blog on Navigating the Opportunities and Pitfalls of International Renewable Energy Markets or this case study on how Verisk is successfully addressing emissions from its global energy load.