Australia’s Guarantee of Origin Scheme: consultation papers

· BCSDA supports this design feature. A single new legislation for GOs would create a natural role for GOs as the primary tool for disclosure in Australia, providing conceptual clarity.

· Inclusion as a provision in existing legislation would have created unnecessary confusion and increased risk for inaccuracy and reduction in the benefits of the scheme.

· For the optimal functioning of markets based on GO mechanism, common, stable, reliable, transparent, and long-term practices are suggested under this legislation. Changing from one way of disclosure to another would undermine the integrity of the GO.

· Possible potential lies in the inclusion of all energy sources in GO scheme. A number of countries have already successfully implemented full disclosure for electricity. Austria allows the issuing, transfer, and cancellation of certificates from all types of electricity sources, including renewables, fossil and nuclear resources. Since 2015, suppliers have been obliged to provide sourcing certificates for each MWh that they have supplied. A similar obligation exists in Switzerland whereby suppliers must declare all electricity consumed by final customers by using GOs. In the Netherlands, a full disclosure system of GOs has been in place since January 2020. In all cases, there is no electricity of ‘unknown origin’ declared in the disclosure mix.

The advantage of full disclosure is that all consumers would know their consumption and the impact of it. Disclosure would be based on the energy mix and fully verified by GOs. By choosing certain sources over others all consumers would be able to send a signal to both policymakers and producers. Implicitly, this might support the policy aim of moving to a less CO2-intensive fuel mix.

BCSDA supports this scheme design.

· Learning from the GO experiences in Europe and US, market transparency and trade efficiency of GOs can be ensured by analysing the market through annual surveys. Widely available knowledge tools like annual report or fact sheet on the main market development, both in the wholesale and end-user platform will update consumers, businesses, and policymakers on the developments on GO products, prices and competition in the markets.

· Clear information on the carbon content of generated hydrogen or renewable electricity on GOs is critical to avoid clean/green washing especially by end-consumers like businesses or organisations. Many consumers, tend to use national statistics on renewable energy and GHG emissions to show their carbon-footprints are lower. With clear information on the carbon content on their GO certificates, clean/green washing can be avoided.

· Additional attributes can be built on the GOs to enable new market uses and innovations and to promote new renewable production. It is important to ensure that the attributes on GO certificate make it possible to develop products which satisfy end user demands for additionality and which make it possible for flexibility in product development for suppliers. Additional attributes included in the guarantees of origin could in time for instance promote the building of renewable capacity and promote environmental projects.

· GOs should contain an increased level of information to empower producers to market their renewable electricity, enable more accurate matching of renewable energy supply and demand, and enable more accurate identification of the emissions benefit of particular renewable projects.

· As corporate buyers increasingly consider the emissionality associated with their GO purchases, adding information useful for carbon accounting purposes could help corporate buyers to make more impactful investments based on potential decarbonisation impact.

· It is suggested that GOs include information on whether a producer has benefited from investment support. Also, to what extend the unit of energy has benefited in any other way from a national support scheme, and the type of support scheme for increased transparency.

· The reliability and accuracy of the information on GOs is essential to create trust in end-consumers and trust is at the heart of GO schemes. Several studies on GO schemes suggest that that people’s conceptualisation of electricity in terms of its physical characteristics and the issue of tracing are important barriers in making them understand and believe in the provided information.

· While GOs can empower customers to make an active choice for contracts that provide electricity or gas from renewable sources, the incentive will be much stronger if the full carbon footprint of the energy source is included in the picture. It is recommended that an (optional) information field on the GO stating the GHG emissions related to a given MWh of energy be included.

· A critical point of concern for the success for GO markets is the development of interconnected power networks alongside market liberalisation strategies for GOs to trade in domestic and international markets. Inter-state and international market flows of GOs are dependent on physical infrastructure for actual power flows. Electricity trade is separated from the physical flows, but physical flows and infrastructure remain barriers in the international trade of electricity and market participants must take part in auctions for interconnector capacities.

· The GO system is designed to serve the final consumers, therefore, it should accurately indicate the share or quantity of energy from renewable or low-carbon sources in an energy supplier’s energy mix and in the energy supplied to consumers. By decorrelating the certificates from the physical flows of the underlying commodity, multiple issues may arise. For example, renewable hydrogen can be blended in the natural gas grid and combusted as a blend of CH4. At the same time, the H2 GO (the certificate being separate from the underlying molecule) can be used against grey hydrogen consumption. This indicates that without clear rules on energy carrier conversion, major unintended issues can arises.

Therefore, creating a distinct GO system for hydrogen and establishing clear rules on energy carrier conversion will be required.

Also hydrogen and natural gas (methane) are different energy carriers and are not interchangeable, therefore H2 GOs needs to be cancelled, and new natural gas GO needs to be issued, ensuring that the use of GOs across energy carriers cannot take place without taking into account the actual energy input and output.

It is important to ensure that the GO system is transparent and benefits the end consumer with full disclosure of information. We also believe it is important that the system is accountable and transparent by setting clear ground rules that avoid false or misleading claims. (Source: Hydrogen Europe)

· To facilitate participation on consumer side, beside GOs, it is important to establish a price and environmental impacts comparison tool for individual/small business consumers. This will enable consumers to choose an electricity offer that best suit their consumption profile and preferences, this information must be presented in an easy and comparable manner. For example, in many end-user markets for electricity offers across Europe, it is not always easy to compare different offers. To attract customers’ attention and pique their interest in the disclosure products, much more is needed to “shake” people out of their routine behaviour and motivate them to act as intended by both suppliers and policy makers. Supplementing marketing channels, such as national campaigns or websites listing suppliers that offer renewable electricity, could potentially trigger customers’ interest in this issue and make them interested in GO certificates.

· At present, the standard size of a GO is set to be 1 MWh. While there are clear benefits to having a standard volumetric unit of energy for GOs, the current definition poses challenges for smaller buyers. The 1 MWh unit is well adapted to annual or monthly matching of electricity production and consumption. However, for smaller buyers pursuing more granular hourly or sub-hourly matching strategies, the 1 MWh standard could prevent them from accurately certifying their renewable energy consumption. Allowing a smaller minimum unit would enable greater adoption of temporal matching strategies by clean energy buyers and prevent a situation where a buyer is unable to certify the matching of their generation and demand.

· For proper functioning of GO scheme, it is recommended that a consistent approach is adopted for generation and surrender of GO certificates. Arbitrary rules for surrendering of GOs, such as requirements that only allow suppliers to retire GOs, or that GOs must be retired within the same month as they are generated, should be avoided.

· Ensuring transparency in GO prices has been observed as a challenge as trade occurs exclusively between parties. A general tendency exists that the price of the certificates would be passed on entirely onto the consumers. It has been seen that the price that the generator has to sustain to produce electricity is not related to the cost of buying green electricity. Therefore, appropriate actions are required in this regard,

· To ensure GOs can support sector integration, the possibility to reflect conversion between different energy carriers through GOs should also be considered. In an integrated energy system, the primary source of an input may not always be evident. GOs can thus play a key role in providing transparency in the energy supply chain by passing the attributes of the converted energy source to the newly issued GOs. This could be achieved by cancelling GOs produced by the main original energy source and issuing new GOs for the new measured output energy carrier that contain proof of the origin of that unit of energy for disclosure.

· As observed in GO schemes in Europe, it is recommended that all renewable electricity producers, irrespective of whether the renewable energy projects are installed behind-the-meter or receive state support should be issued GO certificates. Any such restrictions could potentially break the link between renewable energy producers and consumers and prevents Power Purchase Agreements (PPAs) from being signed. For fears of double compensation, the price of the GOs could be factored in the level of support provided as incentive. Also excluding behind-the-meter self-consumption could create challenges for corporates while making claims against renewable energy goals.

· GO schemes can also be used as catalysts for investments in renewable energy. Therefore, any restrictions on issuance of GOs would hamper PPAs, which are critical for green investments.

· BCSDA supports this methodology.

· BCSDA supports this methodology.

· As observed in GO schemes in Europe, it is recommended that all renewable electricity producers, irrespective of whether the renewable energy projects are installed behind-the-meter or receive state support should be issued GO certificates. Any such restrictions could potentially break the link between renewable energy producers and consumers and prevents Power Purchase Agreements (PPAs) from being signed. For fears of double compensation, the price of the GOs could be factored in the level of support provided as incentive. Also excluding behind-the-meter self-consumption could create challenges for corporates while making claims against renewable energy goals.

· It is important to consider that if a portion of GOs is used for a certain consumer, the share of RES in the residual mix will be less because the GOs used should be extracted from the energy mix.

· The issue of residual mix is also important in terms of domestic renewable energy consumers. If GOs are exported to another country, the domestic residual mix will become less green and domestic customer perceptions will be negatively affected.

· Considering the issue of residual mixes, national rules need harmonising with trading partners for international GO trade, to avoid double counting and providing reliable information.

· The flexibility suggested for granularity is welcomed as it is recommended that transparent information on the timing of GO generation should be provided at a more granular level than simply annually to support corporate consumers willing to attest to the matching of supply and demand.

· The GO scheme can be extended to renewable heating and cooling.

· The scheme could be extended to aerothermal, geothermal, hydrothermal, ocean energy, biomass, landfill gas and sewage treatment plant gases.