Setting corporate climate goals and supporting the transition to renewable energy is commendable, but how can organisations move from plan to action? One way many companies in Europe are meeting sustainability goals, namely scope 2 targets, is by purchasing guarantees of origin (GOs).
GOs help bring clarity to what can otherwise be an opaque market, as without GOs, it can be difficult to know the source of energy purchases. However, these market-based instruments add transparency to energy generation and usage, particularly for the renewable energy market.
In this guide to GOs, we’ll take a closer look at key information such as:
- What GOs are
- Why organisations use GOs
- Types of GOs
- The Association of Issuing Bodies (AIB)
What are guarantees of origin (GOs)?
A guarantee of origin (GO, also abbreviated as GoO) is a market-based instrument typically used to represent the environmental benefits of renewable energy. GOs are often used in connection to one MWh of electricity, but they can also apply to all types of energy, like gas (including hydrogen), or heating and cooling. Organisations purchase GOs on a voluntary basis to meet scope 2 targets and other sustainability goals.
GOs generally certify electricity from renewable sources, such as solar, wind, hydro, or biomass. However, GOs can also be issued for electricity generated from non-renewable energy sources. This broader application allows for a comprehensive tracking of energy origins regardless of the source. Consequently, organisations should ensure any GO purchases align with their sustainability goals.
GOs vs. EACs
GOs are a type of energy attribute certificate (EAC) used across much of Europe. EACs generally represent the non-power benefits of renewable energy, with different countries and regions using different types of schemes that each have slightly different rules.
In the US, for example, renewable energy certificates (RECs) are typically the EAC of choice. Elsewhere, international renewable energy certificates (I-RECs) are another type of EAC used across over 50 countries.
While different types of EACs are often similar to one another, they can vary in areas like vintages and accepted energy sources.
Why are GOs important?
GOs that represent renewable energy are important because they help support renewable energy projects across Europe, and can also allow organisations to claim the environmental benefits of renewable energy generation, without always having to directly obtain power from a renewable energy producer. Depending on factors such as your location, you may not be able to install an on-site solar array or other clean energy source. You also might not be located in a market where you can directly purchase power from a renewable energy generator.
Whether GOs are sold as part of a power purchase agreement (PPA) or separately from their underlying energy sources, purchasing ones linked to green energy can help add value to renewable energy generation and provide incentives to generate renewable energy.
GOs can also potentially be used to lower an organisation’s scope 2 emissions, which include indirect energy purchases, depending on the accounting method used. Under the GHG Protocol’s Scope 2 Guidance, GOs can be used to reduce scope 2 emissions when using the GHG Protocol’s market-based accounting method. GOs can also be used to meet other corporate reporting standards and commitments, such as RE100 and CDP disclosures.
Project types for GOs
GOs can technically certify any energy source, but they predominantly certify renewable energy production, in line with the criteria set by a European Union (EU) directive. While GOs are predominantly used within EU member states, their application extends beyond the EU, including countries like the UK. (However, the UK uses a distinct version of the GO system, as explained later in this article.)
These renewable energy sources include ones such as:
What is the Association of Issuing Bodies?
The Association of Issuing Bodies (AIB) is an international association working across much of Europe to implement a system for issuing, trading, and cancelling GOs. The AIB does this through the European Energy Certificate System (EECS), which is meant to standardise and harmonise the use of GOs across Europe. AIB currently encompasses 36 issuing bodies across 28 countries.
Different issuing bodies maintain their own registries to track GOs. In this diverse landscape, the EECS system, administered by the AIB, serves a crucial role in preventing administrative issues like double counting renewable energy claims across Europe, which would otherwise inhibit climate progress. The AIB functions as a hub that acts as a “central point for transferring certificates between registries,” the organisation explains. This centralization by the AIB ensures a streamlined and consistent approach across different countries, enhancing the effectiveness and reliability of the GO system in Europe.
Types of GOs
GOs fall into two main categories:
1. AIB GOs
AIB GOs are ones that meet the AIB’s EECS requirements, such as specifying the source and production method of the underlying energy, and providing assurance that the rights to the benefits of a specific GO can only be claimed by the certificate holder.
AIB GOs are used across more than 25 member countries in Europe, such as France, Germany, and Spain.
2. Non-AIB GOs
Not all GOs fall under the eye of the AIB and follow EECS requirements. Some countries that are not members may have their own national systems. For example, the UK has a similar yet alternative type of EAC, known as renewable energy guarantees of origin (REGOs), that has slightly different EAC characteristics (e.g., vintage limitations). The REGO “scheme provides transparency to consumers about the proportion of electricity that suppliers source from renewable electricity,” notes the UK’s Office of Gas and Electricity Markets.
As such, careful consideration of the quality of the certificates is necessary before purchasing those that lack the backing of well-established systems like the EECS system or that come from established markets, like REGOs.
Beyond these categories, organisations can also purchase GOs and other EACs that have additional labels that signify enhanced sustainability criteria of the underlying energy sources.
For example, the EKOenergy label is applied to some GOs that meet this ecolabel’s additional sustainability requirements, like those certifying sustainably produced renewable energy.
Even though renewable energy suppliers generally release minimal operational greenhouse gas (GHG) emissions compared to fossil fuels, that does not mean that all renewable energy generation has the same environmental impact. EKOenergy criteria, for instance, require solar or wind installations to be “located outside protected nature areas and outside important bird areas. The same rules apply to energy from geothermal installations and from marine energy installations,” the organisation explains.
◉ AIB GO (AIB Guarantee of Origin)
Getting started with GOs
While GOs can provide important environmental advantages, and organisations like the AIB are trying to provide clarity and standardisation, it can be difficult to navigate the market on your own.
If you’d like more guidance on how GOs can support your sustainability goals and help you lower your scope 2 emissions footprint, please get in touch. 3Degrees, an award-winning seller of renewable energy, only offers GOs that represent renewable energy, and we can help you figure out how GOs fit into your energy and emissions strategies.
Want some quick answers to frequently asked questions about GOs? Take a look at the following:
What is the price of a GO?
A GO does not have a fixed price. Instead, it is a market-based instrument with a fluctuating price based on supply and demand. GO pricing can be volatile, but has gone up significantly since 2022.
Who issues GOs?
GOs are authorised by different issuing bodies such as regulators throughout different countries in Europe, each operating under its country-specific regulatory framework. However, the AIB aims to harmonise the issuance, trading, and cancellation of GOs throughout much of Europe, though countries outside of this scheme, such as the UK, have their own schemes that adhere to distinct regulatory guidelines and objectives.
For more FAQs about EACs (GOs are one of several types of EACS), see our guide on global EACs here.