Upgrading guarantees of origin to promote the achievement of the EU renewable energy target at least cost

Abstract

The Paris Climate Agreement environmental targets and the European Green Deal imply a significant and reduction of Greenhouse gas emissions in Europe. In the energy sector, a greater penetration of renewables will contribute to this effort: along with electricity renewable sources, fossil gasses will need to be increasingly replaced by renewable gases, where electrification is not feasible or possible. Further mechanisms will therefore be required, in addition to the Emissions Trading Scheme (ETS), to facilitate their deployment. This Report, developed under the Directorate-General for Energy of the European Commission, explores alternative mechanisms that could further catalyse progress towards the renewable penetration target, while maximising an efficient selection of energy vectors leading to that purpose. We propose Guarantees of Renewable Origin (GROs) as a possible tool, building on the existing Guarantees of Origin (GOs) model and utilising synergies with the ETS. The analysis explores current EU legislation on GOs and the experiences therein, the multi-purpose function of a GRO as well as its possible implications as regards issuance, trading, surrendering and cancellation. The Report finds that an ambitious and comprehensive GRO scheme could serve as the main, basic support mechanism for renewable energies, going beyond the scope of the current ETS.