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Guarantees of Origin and their role in the Green Energy Transition

June 29th, 2024
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The corporate attitude to sustainability is changing as we move closer towards a green transition, supporting a decarbonisation movement that is shifting from energy consumption based on fossil fuels to an energy mix that produces limited or zero carbon emissions. This is done through renewable energy growth of sources such as solar, wind, geothermal and ocean.

It was announced at COP28 in Dubai that fossil fuels should be eradicated by tripling renewable energy capacity by 2030. By 2050, the aim is for total Carbon Neutrality, by reducing the majority of greenhouse gases and offsetting extra emissions via carbon credits. We take a look at the role that Guarantees of Origin (GOs) can play in aiding the green energy transition.

GOs as a catalyst for renewable energy growth

Guarantees of Origin are a way to verify where a source of energy has originated from and supports a changing sentiment for corporate sustainability strategies. Factors such as whether the buyer is an Energy Intensive Industry, such as aviation or cement production - and the type of renewable energy businesses are looking to invest in all have an impact on the uptake of GOs.

Encouraging trusted methods to verify energy source

A voluntary scheme introduced in 2011 alongside the EU’s Renewable Energy Directive, Guarantees of Origin track the energy directly to the power plant that has generated it and can highlight the choice of renewable energy over fossil fuels. GOs are a standard, measurable scheme - one Guarantee of Origin correlates to 1 Mph energy and they are usually acquired to verify that the energy bought is from a 100% renewable source.

Increasing investment in renewable energy 

Consumer purchase power is driving the adoption of green energy, as consumers indicate their willingness to pay more for greener sources of energy. This is indicative of the popularity of green tariffs set by utility suppliers, which provide green energy to households at a higher rate. Guarantees of Origin make it easier for businesses to promote their use of green energy, making companies more attractive to a certain set of target consumers. 

Advocating for renewables through preferred suppliers 

Many businesses are now monitoring the sustainable health of their businesses through a method called carbon-conscious investing, which involves examining their business’ carbon emissions output as a whole - including suppliers and potential investments. Providing Guarantees of Origin can help potential stakeholders or investors calculate your business’ positive impact on their business as they can verify the source of renewable energy procured. 

Facilitating the green transition through GOs

Currently, Guarantees of Origin are the only legal method to verify that a company is using 100% renewable energy in the EU. Guarantees of Origin also help to avoid what’s known as double counting - when two different companies claim their renewable energy is coming from the same renewable power source, which can lead to greenwashing.

If companies are successful to achieve green energy transition, they will need to accurately calculate their carbon footprints to determine how much fossil fuels they are consuming. Guarantees of Origin assist in calculating carbon footprints as they can accurately track the amount of green energy procured by a business, differentiating between renewable intake and fossil fuels. To learn more about how carbon footprints are calculated in relation to Guarantees of Origin, visit the Defra/ Department for Energy Security and Net Zero ‘Environmental Reporting Guidelines: Including streamlined energy and carbon reporting guidance’

The impact of GOs on national energy strategies, policies and renewable energy incentives

Guarantees of Origin will be a vital tool in facilitating wider energy strategies and policies, such as the EU’s Corporate Sustainability Reporting Directive. Companies will need to share more information about environmental risk thanks to the Corporate Sustainability Reporting Directive, which was introduced at the start of this financial year. The directive aims to provide clarity around business’ environmental risks to potential consumers, stakeholder and investors and could mean the difference between business collaboration, or not. 

Companies will be required to report water use, air pollution, greenhouse gas emissions and non-renewable or renewable energy use, and so Guarantees of Origin are a key tool to help report on the last in this list of metrics. Businesses must report on their greenhouse gas emissions, water use, air pollution, non-renewable energy use and crucially, renewable energy use - which can be quantified through Guarantees of Origin. 

Renewable energy incentives are often set by the government to incentivise a switch from a fossil-fuel-led method to a green one. Guarantees of Origin can help to track the switch from fossil fuels to renewable by quantifying the amount of green energy replacing the fossil-fuel-based methods. 

GOs as a mechanism for tracking progress in the green energy transition

Guarantees of Origin accurately track renewable energy back to the source, but some innovators in the field are going one step further and allowing renewable energy buyers to source renewable energy from specific power plants. 

Companies like Becour have developed software platforms such as Marbly to allow the energy procurer to source energy from a specific plant. The benefits of this include a direct link to the renewable provider including updates and case studies showing where the energy buyer’s money is going which creates loyalty from as it simulates more or a partnership than a simple transaction.

Certificates also aren’t purchased through brokers, which means that more of the funds go directly to the renewable producer, directly supporting the renewable providers that are generating the green energy - currently 80% or more of sales revenue from transactions on Marbly go directly to the renewable plant. For some, purchasing Guarantees of Origin is simply a box-ticking exercise, but with the field evolving in line with the growing interest in renewables, they could become a key tool in aiding the green energy transition. 

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