The Federal Government’s Guarantee of Origin is a world-class certificate scheme safeguarding Australian clean energy producers and consumers, writes Clean Energy Regulator chair David Parker.
Australia is poised to be a leading player in the global push for renewable energy, and I am proud to share how the Clean Energy Regulator is delivering an initiative that will develop new markets for renewables and low-emissions products, and provide transparency and integrity around emissions reduction claims.
As part of Australia’s effort to meet our emissions reduction targets, we have seen a momentous shift to renewable electricity generation. We have also seen strong progress in developing the technology to reduce emissions in the hard-to-abate industrial and transport sectors using hydrogen, electrification and bio and synthetic fuels. Markets for renewables and low-emissions products are growing and will be critical for meeting global decarbonisation goals.
Recent data shows the transition to net zero is accelerating with notable increases in large-scale renewable projects and rooftop solar investment. A total of 4.2GW of large-scale renewable energy capacity achieved final investment decision in 2022. This materially exceeded the 3GW capacity expected for the year.
In addition, more than 300,000 small-scale rooftop solar systems were installed in 2022, contributing an additional 2.8GW of renewable energy capacity. Early signs for 2023 are further growth in renewable energy supply.
Key to the long-term success of renewable investment in Australia has been renewable energy certificates issued and regulated by the Clean Energy Regulator. These certificates provide renewable electricity producers with a way of extracting value from their clean energy, and consumers with proof they are consuming low-emissions energy and reducing their overall emissions footprint.
However, renewable energy certification under Australia’s Renewable Energy Target (RET) is set to conclude in 2030 and a gap has emerged in how certification of renewables should occur during the next decade.
In addition, new low-emissions commodities such as hydrogen and ammonia, synthetic fuels and metals have a demonstrated need for certification to establish and expand new markets. Certification will mean products can earn a price premium for their clean, green, low-emissions attributes.
Guarantee of Origin scheme
Enter the Guarantee of Origin – also known as GO – a world-class certificate scheme designed by the Australian Government. This scheme is planned to succeed the work of RET in certifying renewable electricity, as well as providing a framework to verify emissions associated with hydrogen and other low-emissions products made in Australia.
Verifying emissions under the Guarantee of Origin scheme is important for integrity and in the fight against greenwashing.
When an eligible product such as hydrogen is produced, a digital certificate will be issued that travels through the supply chain, showing where it is made, what it is made from, and how it is transported, until it is finally sold and consumed.
At each stage, details of greenhouse gas emissions and other information are added to the certificate. This information will be validated by the Clean Energy Regulator to provide integrity to the data provided. The regulator will also run a robust compliance program to manage the overall integrity of the certificates.
Designing a scheme that works for industry and is internationally accepted
The Clean Energy Regulator is working with the Department of Climate Change, Energy, the Environment and Water (DCCEEW) to design a scheme that meets industry needs and enables Australia to access international markets for low-emissions products. We can only do this through strong and effective co-design with industry and close engagement with international partners.
The Clean Energy Regulator is currently leading trials for GO to test and refine emissions accounting rules and settings for an effective scheme. The trials are planned to run for 18 months, ending in June 2023, and are heavily co-design-focused with direct involvement and input from real projects and early adopters within the renewables and hydrogen industries.
The first phase of the trials, which ran from February to August 2022, focused on hydrogen production. The trials are now in a second phase examining ammonia, hydrogen carriers and renewable electricity.
Participation in the trials has grown to include 29 companies from the hydrogen, ammonia and renewables sectors. These companies have spent time sharing data, learnings and project designs to support a certificate scheme that is practical and of high integrity, allowing users to extract the commercial advantages of creating low-emissions products.
The Australian Government is also working to ensure the development of Guarantee of Origin is internationally accepted by collaborating with other countries and leading development of carbon accounting methodologies as a member of International Partnership for Hydrogen and Fuel Cells in the Economy (IPHE).
IPHE is an advanced multilateral government forum for international collaboration on developing the global hydrogen industry. It has more than 22 member countries, including most of Australia’s priority trading partners.
DCCEEW is also leading the way in testing carbon accounting methodologies developed through IPHE on real-world projects. Critical learnings are being shared to refine these methodologies and inform international approaches to guaranteeing the origin of hydrogen.
Why a regulator?
In a world competing for investment, integrity is one of Australia’s key competitive advantages. The Clean Energy Regulator has been administering carbon accounting and carbon markets schemes that are more than 20 years old and held in high regard internationally.
This experience in the regulating of emissions and renewable electricity, as well as having a certification scheme backed by the force of law, provides for the highest possible level of integrity and is an advantage Australia can exploit to grow new clean industries.
Development of the Guarantee of Origin scheme is underway, with a targeted launch in 2024. DCCEEW released discussion papers consulting on the design of the scheme in December 2022 that closed on 3 February, 2023.
David Parker AM has been chair of the Clean Energy Regulator since July 2017. With a career spanning more than 25 years with Commonwealth Treasury, he has worked across financial sector liberalisation, tax reform, macroeconomic forecasting and policy, competition policy, energy policy and international economics.