Environmental commodities
Guarantees of Origin (GOs)
What is a GO?
A Guarantee of Origin (GO) stands as a pivotal instrument within the European energy market, serving as a specific type of EAC designed to verify and trace renewable energy production and consumption. Issued by the designated national authorities of each European country, GOs represent a transparent mechanism for accounting for one megawatt-hour (MWh) of electricity generated from renewable sources. Each certificate details critical information, including the energy's source, the technology utilized (e.g., wind, solar, hydro), the geographic region of generation, and the production year, or "vintage."
GOs are distinct in their capacity to be traded across national borders within countries connected to the European single energy market and the Association of Issuing Bodies (AIB). This cross-border tradability enhances the flexibility and reach of renewable energy attributes, facilitating a more integrated and sustainable European energy market.
Why are GOs Important?
GOs address a critical challenge in the renewable energy sector: the difficulty of physically tracing the origin and method of electricity generation once it enters the universal utility grid. By enabling the tracing and attributing of renewable electricity generation to specific consumers, GOs ensure that entities claiming to use renewable energy can credibly substantiate those claims. This system is vital for maintaining integrity and trust in the renewable energy market.
Through the process of issuing, trading, and ultimately retiring or redeeming GOs, these certificates provide a reliable method for tracking the generation and consumption of renewable energy. This framework supports companies in making genuine renewable energy purchases, even when direct physical tracking of electricity from source to consumption is not feasible.
Beyond their role in verification, GOs also play a significant part in encouraging the shift towards renewable energy usage and in driving down greenhouse gas emissions. By offering a transparent and verifiable method for companies to claim renewable energy usage, GOs stimulate demand for green energy. This demand, in turn, supports the development of new renewable energy projects, contributing to a decrease in carbon emissions and helping Europe move towards its sustainability and climate goals.
How to Trade GOs
How to Trade GOs
GOs are applicable throughout Europe within countries participating in the European GO market. The European GO market is a voluntary marketplace facilitating the buying and selling of GOs by companies and individuals. GOs are similar to US-RECs in a way that US-RECs can also be traded across the US. However, unlike GOs, I-RECs lack the flexibility to be traded between different I-REC regions. Consequently, a company cannot offset energy use in a Colombian factor with Chinese I-RECs. In contrast, GOs empower companies to procure Italian GOs to offset energy use in a factory located in France for example.
GOs, tradable on the European market, enable companies across Europe to demonstrate sustainability commitments. Like other EACs, GOs can be traded OTC style, through exchanges, and via aggregators.
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