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Securing Sustainability: Why Norway Needs to Keep Its GoOs

Most people will somehow have heard about “Guarantees of Origin (GoO)” but are not fully aware of how they function nor their importance on a company’s sustainability roadmap. These are financial certificates issued for energy derived from renewable sources, to prove that the power supplied by an energy supplier comes from a specific renewable source.

Defined in an environmental compliance directive put in place by the EU commission in 2009 [Directive 2009/28/EC], the intention of GoOs is to track the production and consumption of renewable energy. “Buying Guarantees of Origin sends a signal to the market that you prefer to consume renewable energy and it shows your commitment to changing energy behavior.” [ECOHZ 2018].

Renewable Energy - GoOs

What happens if businesses don’t buy GoOs?

If a business doesn’t buy these certificates from a certificate provider, the energy they consume will not be seen as “green energy”. The greenhouse gas contribution of the energy consumed is automatically calculated based on average values in accordance to factor definitions provided by Norges vassdrags- og energidirektorat (NVE).

Based on recently published numbers from NVE, if you do not use GoO’s it only takes 1884kWh to release one metric ton of CO2” (1 ton = 1” grams 1”/531 (NVE number) =1883,23kWh). This includes the environmental impact of energy from fossil resources. Not purchasing GoO is one main factor determining the environmental and especially greenhouse gas performance of an organization.

Since there is limited amounts of renewable energy available, the number of GoOs available on the market is limited as well. If businesses haven’t secured their share, there is a likelihood of being too late in the future. After all, among all products and services worldwide, there is growing demand for certified eco-friendly, energy efficient solutions.

There is also the sustainability issue of trading and selling GoOs to consider. While an electricity supplier may purchase GoOs, they may then trade or sell off these certified energy sources to foreign markets for financial gain and instead use non-GoO certified energy sources in their own supply to customers. The emissions profile of their domestic market skyrockets as a result!

The use of GoOs in Norway

NVE states that 81% of the energy in Norway was consumed without certificates of origin in 2017 [NVE 2018]. At the same time Norway is the largest producer and exporter of GOs in Europe, accounting for 28% (138,5 TWh)” [EN 2017].

On the world stage, this doesn’t reflect well for Norway. Despite the fact that renewable, clean energy may have been provided and physically used by Norwegian businesses and households, the certificates to prove it have been traded or sold off rather than used to declare their source and reduce the emissions profile of the country.

Without certificates of use of renewable energy as evidence, the nation’s energy consumption is significantly impacting the emissions profile of Norwegian energy consumers. As it stands, the emissions profile of average Norwegian electricity is 1.7 times worse than the average European electricity emission profile (calculated based on IEA 2016 and NVE impact data).

Norway - Sustainable energy

Why is Norway trading its GoOs?

As one of the leading producers of clean, renewable energy sources in Europe, and indeed the world, you may wonder, why isn’t Norway publishing their commitment to renewable energy to the world by using GoOs to reduce their emissions profile? The emissions profile of a country is a direct reflection of how their environmental commitment is perceived after all.

While the number of purchased and retained GoO certificates in Norway is increasing – only 15% of energy consumed in 2015 had been purchased with GoOs vs 19% in 2017 – the level of growth is certainly quite slow. This is due to a lot of misunderstandings and misconceptions about the use and value of GoOs – two of which stand out for me in particular:

1. Significant hydro power production = excellent emissions profile

Perhaps one of the most common misconceptions about Norwegian electricity is that since we are producing so much hydro power, the country must automatically have a great emissions profile and therefore how the level of power we consume isn’t an issue.

The World Bank has published some interesting data on this: Norway has an energy consumption of 23.000 kWh/capita and year, significantly higher than the average EU value of 5.900 kWh/capita and year (WB 2014).

However, although Norway is one of the biggest suppliers of hydro power, this isn’t backed up by purchase of GoOs so is not evident to a global audience. To the wider world, it simply appears like Norwegian households and businesses use a lot of electricity, most of which is not sourced from renewable sources, and our emissions profile takes a battering as a result.

2. Misunderstanding the international impact

Businesses in Norway have not yet fully understood the importance of their greenhouse gas emissions and sustainability figures in their ability to compete internationally.

Verdantix has conducted market research forecasting a significant growth of the role of product and supply chain stewardship in a few upcoming years [Verdantix 2017, Verdantix 2016]. It means that suppliers need to be ready to use the sustainability and environmental performance of their products, services and overall organization to achieve competitive advantage in tendering or bidding processes.

Proven use of electricity from renewable sources provides a baseline for businesses to achieve good environmental performance [CEF 2019], comply with European regulation, succeed in B2B procurement evaluation and meet international stakeholder expectation regarding sustainability. If the electricity supplied to a business isn’t backed by a GoO, the business will fall down significantly in terms of their sustainability performance in this area.

We’re power pioneers, but we need our GoOs

Norway continues to be the biggest hydro power player in Europe. However, for our reputation as an environmentally friendly country to truly soar on the world stage, we need to retain our GoOs as evidence.

Author – Fabian Hassel, COO, Emisoft As.

Fabian Hassel – COO, Emisoft

 

References:

  • Conserve Energy Future; 2019, 9 Ways Businesses Can Benefit From Renewable Energy; https://www.conserve-energy-future.com/9-ways-businesses-can-benefit-renewable-energy.php
  • DIRECTIVE 2009/28/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 23  April 2009 on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and  2003/30/EC, https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:140:0016:0062:en:PDF
  • ECOHZ, 2018; Guarantees of Origin (GOs); https://www.ecohz.com/renewable-energy-solutions/guarantees-of-origin/
  • Energienorge; 2017; Analysis of the trade in Guarantees of Origin, https://www.energinorge.no/contentassets/ac0b5a4fc38b4111b9195a77737a461e/analysis-of-the-trade-in-gos.-oslo-economics.pdf
  • ICIS; 2019; ICIS Power Perspective: Demand for Guarantees of Origin grows, but regulatory outlook remains uncertain, https://www.icis.com/resources/news/2018/03/19/10203654/icis-power-perspective-demand-for-guarantees-of-origin-grows-but-regulatory-outlook-remains-uncert/
  • Norway – Energy System Overview; International Energy Agency; 2017, https://www.iea.org/media/countries/Norway.pdf
  • Electricity disclosure 2017; NVE; 2018, https://www.nve.no/energy-market-and-regulation/retail-market/electricity-disclosure-2017/
  • Opprinnelsesgarantier; NVE; 2018, https://www.nve.no/energiforsyning-og-konsesjon/opprinnelsesgarantier/
  • Final Report from the project “Reliable Disclosure Systems for Europe – Phase II”; Intelligent Energy Europe; European Commission; 2015, http://www.reliable-disclosure.org/
  • Verdantix, 2017; Verdantix Says The Global Market For Product Stewardship Will Grow To $1.2 Billion By 2021; http://www.verdantix.com/newsroom/press-releases/verdantix-says-the-global-market-for-product-stewardship-will-grow-to-1-2-billion-by-2021
  • Verdantix; 2016; Global Supply Chain Stewardship Spend Will Nearly Double in the Next Five Years; http://www.verdantix.com/blog/global-supply-chain-stewardship-spend-will-nearly-double-in-the-next-five-years
  • The World Bank; 2019; Electric power consumption (kWh per capita); https://data.worldbank.org/indicator/EG.USE.ELEC.KH.PC?locations=NO
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