A fair governance for enhanced guarantees of origin

Second debate devoted to Guarantees of Origin

The EU Strategy for Energy System Integration, released in July this year, calls for a “more circular energy system, with energy efficiency at its core, in which the least energy-intensive choices are prioritised”. A holistic approach to deliver overall efficiency in achieving the renewables penetration target requires a “common currency” which provides a consistent (price) signal against which the cost of different technologies and renewable vectors can be assessed.

More generally, as the renewable penetration target could be achieved with different mixes of technologies and renewable energy vectors (renewable electricity, renewable gases, biomass,etc.), an approach is needed which promotes the achievement of the target at least cost. And the need for least-cost solutions will be greater the more ambitious the renewable target becomes.

In the first debate, which took place on October 6^th, we looked at the extent to which Guarantees of  Origin (GOs) could become, if “upgraded’, this ‘common currency’. As such, they would promote the achievement of the renewables energy penetration target at least costs via a mix of renewable-based vectors, through the equalization of the marginal costs of replacing the conventional form of each vector with its renewable equivalent.

The panel discussed the potential role that such enhanced GOs could play in the context of the energy transition and sector integration, guided by cost-effective and evidence-based policies. An enhanced role for GOs would imply a number of additional requirements in terms of standardisation/harmonisation of GOs, and better tradability and traceability.

While the FSR proposal received overwhelming support, in the course of the event, questions on the relationship between upgraded GOs, EmissionsTrading, and other support schemes were raised, which should trigger an assessment of the current governance of the GOs and its features in this new role.

The webinar will be moderated by llaria Conti (Florence School of Regulation) and Alberto Pototschnig (Florence School of Regulation and former ACER Director).

Watch the recording:

Invited speakers:

Jeppe Bjerg | Gas Infrastructure Europe

Katrien Verwimp | AIB

Roelf R. H. Titkak | ERGAR

Michele Governatori | former President EU Energy Retailers

Background

During her first State of the Union speech, President of the European Commission-Ursula von der Leyen-proposed to raise the EU 2030 greenhouse gas (GHG) reduction target to at least 55% as part of a broader European Green Deal framework aimed at reaching climate neutrality by mid-century. It means that the share of renewable energy in the final energy consumption is expected to increase to 38.5% by 2030 and achieving this target will require not only additional investment but also a sound internal market framework and cost-effective planning and development of renewable energy technologies. To this end, the European Commission is planning a major overhaul of the current RES framework. The legislative proposals are expected in June 2021 and one of the focus areas is the creation of a comprehensive terminology for all renewable and low-carbon fuels and the European system of certification of such fuels building upon full life cycle GHG savings and sustainability criteria and existing provisions, i.e. Renewable Energy Directive 2 provisions.