Page 35 - Gi_March2022

igem news – yppc

How do Guarantee of Origin schemes work? climate value market mechanisms. This
As illustrated in Figure 1, it is key to drives the need to explore how hydrogen
emphasise that a GoO market (i.e., GoOs could interact with existing
digital document market) is separate to mechanisms such as UK Renewable
the physical energy commodity market. Energy Guarantees of Origin⁶ (REGOs),
The core principle of a GoO scheme the UK carbon Emissions Trading
is that one GoO can be issued for each Scheme⁷ (UK ETS), Renewable Gas
energy unit (i.e., MWh or kWh) of Guarantees of Origin⁸ (RGGOs), etc.
eligible energy product. For example, As low carbon gases increasingly
the issue of one low carbon hydrogen penetrate the UK’s gas networks during
GoO would be verified by metering the transition to net zero, it will become
evidence from 1MWh of eligible low essential to have a system such as a
carbon hydrogen production. GoO scheme to track, account for and
When a GoO is issued, the ownership associate a climate value for low carbon
of a GoO can be transferred from the gases such as hydrogen.
energy producer to the buyer of the GoO
(this could be a trader, a supplier, etc). What are the benefits of
When the GoO is sold to an end user, a UK hydrogen GoO scheme?
the GoO would then be cancelled to Hydrogen GoOs could provide benefits
prevent any double counting. to market participants across the UK’s
gas industry value chain.
Why explore a UK hydrogen Benefits to hydrogen producers:
Guarantee of Origin scheme? As illustrated in Figure 2, hydrogen
There are several reasons why hydrogen GoOs could provide an additional
GoOs are likely to be extremely relevant revenue stream for hydrogen producers
for UK gas market participants. (on top of remuneration for the physical
To begin with, there is wide industry hydrogen commodity) to maximise the
consensus that low carbon gases will be climate value attributes of their low
essential to meeting the UK’s ambitious carbon energy product.
net zero targets 2,3,4 . This will require the The sale of GoOs would also enable
UK to scale up production and end use hydrogen producers to gain information
of low carbon gases such as biomethane on consumer appetite for their product,
and hydrogen. However, because it is providing evidence that could justify
impossible to know the origin of gas expanding hydrogen production
molecules consumers receive at the facilities to meet consumer demand.
meter, a certification scheme such as a As a market mechanism, hydrogen
GoO scheme will be essential to track, GoOs could generate an important
account for and associate a climate revenue stream to incentivise low carbon
value premium for low carbon gases, hydrogen production to support the UK’s
including hydrogen. overarching goal of decarbonisation.
We also know that extensive work
is taking place in the EU on hydrogen Benefits to hydrogen transporters:
Defining Guarantees of Origin: GoOs, and it will be important for the UK A hydrogen GoO scheme could benefit
Guarantees of Origin are digital documents to understand these developments to hydrogen transporters as GoOs enable
that capture information on the origin ensure compatibility and benefit future virtual trade ahead of physical change.
of energy products. A GoO includes cross border hydrogen GoO trade. For For example, if low carbon hydrogen is
information such as how, when and where example, CertifHy⁵ is an EU-funded blended into the UK’s existing natural
an energy product was generated. project exploring the development of an gas networks, there would be no means
Although buying GoOs does not EU hydrogen GoO scheme. to differentiate the hydrogen products
influence the energy that enters In addition, the development of a from the natural gas products without a
consumer meters (because it is UK hydrogen GoO scheme would have certification system such as a GoO scheme
impossible to physically trace where important implications for existing UK in place. Hydrogen GoOs could therefore
molecules or electrons go once injected
into the respective gas or electricity
energy systems), GoOs enable an audit FIGURE 1 ILLUSTRATION OF HOW A HYDROGEN GOO SCHEME COULD OPERATE
trail to account for the production of
energy products as well as providing a
means to associate an additional value for
the climate attributes of energy products.
One of the most important features
of a GoO is that a GoO can be de-
coupled and traded independently
from the physical energy commodity
it represents. In this way, GoOs can be
used to maximise the climate value
attributes of an energy product.

35

24/02/2022 10:30
IGEMNews_YPPC.indd 2
IGEMNews_YPPC.indd 2 24/02/2022 10:30