GO double counting: does the European Commission care?
The AIB just published its feedbackon a draft act published by the European Commission (EC). While waiting for the Commission’s adoption of the draft – with or without considering AIB’s comments -, let us analyse the proposed changes by the EC and what the AIB has answered to that.
Analyst - Renewable Power
Climate change enthusiast and former OECD Economics Consultant on Renewables within the IPAC. Holds a Master in Economics and Public Policy from Sciences Po Paris.
The EU Commission proposal
On May 20th, 2022, the European Commission published a draft act for a supplement to Directive (EU) 2018/2001, aiming to set “requirement for renewable electricity used to produce renewable transport fuels so they can be counted as fully renewable”.
Following, this draft publication, a 4-week consultation (ending June 17th) was opened for experts and citizens to provide their views on the draft. So far, 336 feedbacks have been received, from 36 different countries (20 EU member countries out of 17 participated) (see below).
In the draft, the EC reaffirms, in line with the recent release of the REPowerEU plan, “the need of the Union for a rapid clean energy transition and the reduction of its dependency on fossil fuel imports”.
Furthermore, brand new rules are set, subject to discussion and amendments of course.
In a nutshell, here are the main points of this draft from the EC:
- Consider electricity as renewable at the consumption point where it is converted into hydrogen
- “Consider a time period of up to 36 months when determining if an installation generating renewable electricity has come into operation after, or at the same time as the installation producing renewable liquid and gaseous transport fuel of non-biological origin”
- “The installation supplying electricity for hydrogen production through a direct connection should always supply renewable electricity. If it supplies non-renewable electricity, for instance, obtained from the grid, the resulting hydrogen will not be considered renewable”
This draft thus sets new rules for counting electricity “sourced from directly connected installations as fully renewable” (Art. 3) and “electricity taken from the grid as fully renewable” (Art. 4).
Whilst these rules may seem clear and appropriate, the AIB, in its answer, raised a certain number of legitimate concerns, such as double counting.
As said above, a big number of feedbacks were received, from all types of parties. We here focus mainly on the AIB answer, as it is the issuing body of Guarantees of Origin and thus the most prominent and well-suited actor to discuss the rules that apply.
The AIB answer can be summarized in three main points:
1. The “EU legislation must be clear and unambiguous about the purpose of energy tracking”: as per the current legislation, nothing refers to hydrogen producers having to use cancelled GOs to state that their hydrogen is renewable (the AIB recalls that it nonetheless applies to electricity producers) (i) and that REDII Art. 27.3 allows tracking for the Member States, not Consumers like the GOs do.
2. Instead of not making the two tracking systems (for renewable electricity, GOs, and for renewable transport fuel, the quota obligation) not work together, the EU legislation should seek “consistency”.
3. To “overcome the double counting risk”, the EU legislation should count electricity sourced from directly connected installations as fully renewable “if either GOs are cancelled to prove the renewable origin OR it is clearly proven that no GOs have been issued for it nor that any other claims have been or will be attached to the origin of it”. Idem with Art. 4 (related to “counting electricity taken from the grid as fully renewable”), it must be clearly stated for the AIB that “the renewable character of electricity shall be proven with cancelled GOs” and that “Purchase agreements for renewable energy should by law build on cancelled GOs”.
It is no surprise that the AIB considers GOs as the main tool for proving the renewable character of electricity, both for installations and the grid. Whilst these comments made by the AIB could seem like a ‘pro GO’ manifesto, it is certain that the draft presented by the EC lacks consistency in tracking renewable electricity (i) and that the EC is not using the full power of GOs in the pursuit of achieving its renewable targets.
When the final draft for signature will be published by the EC, we will notice if AIB’s concerns have been considered.