Comment, Emissions Reduction, Policy, Renewables

Certifying renewable energy through Guarantee of Origin scheme

The Federal Government’s Guarantee of Origin certificate scheme is helping drive Australia to a low-carbon economy as the nation embraces its renewables future, writes Clean Energy Regulator chair David Parker.

Australia’s ambitions of becoming a global renewable energy leader have taken a step forward following the Federal Government’s $38.2 million investment in delivering a world-class Guarantee of Origin (GO) certificate scheme.

The Department of Climate Change, Energy, the Environment and Water (DCCEEW) is working with domestic and international stakeholders to design the scheme, and the Clean Energy Regulator will administer it once it is legislated to help drive the transition of Australia’s economy to low-carbon products. Announced as part of the 2023 Federal Budget, GO is expected to commence in 2024 and will be a game changer in developing new markets for renewables and low-emissions products.

The Guarantee of Origin scheme will track and verify emissions associated with hydrogen and other low-emissions products, and provide an enduring mechanism to certify renewable electricity. Certificates will show where a renewable or low-emissions product has come from, how it was made and its lifecycle carbon intensity.

At its heart, the scheme is about providing markets with high-integrity emissions information about products to help them operate efficiently. Information published on a GO certificate will support renewables and hydrogen investment and improve access to markets for low-emissions products.

Enabling new investment in renewable electricity

In the April edition of EcoGeneration, I discussed how Australia’s long-term transition to clean energy is supported by renewable energy certificates issued and regulated by the Clean Energy Regulator. The proposed renewable GO certificate will build on the effective and highly regarded Large-scale Generation Certificate (LGC) framework which ends in 2030.

The seamless continuation of certification post-2030 through renewable GOs will allow the industry to keep reaching long-term power purchase agreements and maintain a market for renewable electricity.

Enabling incentives for low-emissions products, including hydrogen

The GO scheme will enable producers to seek premiums for goods that produce lower emissions. Many companies are willing to pay for credible low-emissions claims. This has already been demonstrated in the growing voluntary demand for existing renewable energy certificates and Australian Carbon Credit Units by businesses. Extracting a green premium improves the economics of new low-emissions projects and will draw forward investment and emissions reduction.

The GO certificate will also facilitate acceptance of Australian products worldwide. With countries and regions increasingly establishing criteria around the emissions associated with imported products, we need a way of showing that our goods qualify to access markets. The GO certificate will accompany cargos leaving Australian ports to provide trading partners with assurance of the lifecycle emissions of the product.

The Australian Government is already actively working with international bodies, standards organisations and trading partners to make GOs internationally recognised.

The benefit of a national certificate scheme is it can reduce regulatory burden and establish GO as a source of truth for government incentives, market transactions and private schemes. Several government schemes at national and state levels are now being developed to incentivise hydrogen, and are using GO as the foundation of the emissions claims. I am encouraged to see the NSW and Western Australia hydrogen production targets have identified GO as the foundation of their schemes.

Additional tools for traceability and corporate emissions goals

By providing consumers with information to choose energy and products produced from renewable sources, the GO scheme raises the public’s awareness of the environmental impact of their energy consumption. This helps to foster a societal shift towards more sustainable behaviours.

Corporations are now looking hard at reducing not only their emissions but the emissions of their inputs (Scope 2 and Scope 3 emissions). GO certificates can provide a far more robust and systemised way for companies to understand their upstream emissions footprint and make choices to switch to products with lower emissions intensity.

High-integrity certificates

The benefits from a GO certificate only come if the information is trusted and transparent. Without credible claims, the pace of transition to decarbonise our economy will slow.

Further, the GO scheme will reduce opportunities for greenwashing. Increased public reporting on the data-rich GO certificates will help consumers and stakeholders understand claims in detail.

Fortunately, the foundations of the GO scheme are built on Australia’s existing world-class carbon accounting schemes, including the National Greenhouse and Energy Reporting Scheme, administered by the Clean Energy Regulator. These schemes provide a rich source of data that allows us to undertake data matching and compliance cross-checks.

I am confident we can deliver a scheme that is robust and transparent. I am also excited the Clean Energy Regulator has been offered the opportunity to deliver another scheme that will help drive the transition of Australia’s economy to a lower carbon future.

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