Guarantees of Origin and Carbon credits (GdOsolar Blog)
While Guarantees of Origin are recently gaining attention in certain markets, carbon credits have had more attention in past years and are widely known. We want to shed some light on these instruments to promote renewable energies and environment protection projects.
Which ones are more appropriate for my company?
The decision to use either GO certificates or carbon credits to offset a company's carbon footprint will depend on various factors such as the company's specific goals, values, and circumstances.
If a company's primary objective is to support the development of renewable energy sources and encourage the transition to a low-carbon economy, then purchasing GOs may be more appropriate. This would certify that the electricity the company purchases is generated from renewable sources.
On the other hand, if a company is primarily focused on reducing its own greenhouse gas emissions, then purchasing carbon credits may be more appropriate. Carbon credits can be used to offset emissions that cannot be reduced through internal efforts, such as transportation.
It is important to note that while there are some differences between GO certificates and carbon credits, they can also complement each other. For example, a company that purchases carbon credits to offset its emissions may also want to purchase GO certificates to verify that the electricity it purchases is generated from renewable sources. A major advantage for us when it comes to GOs is that, at least in Spain, the measurements are related to production 1:1 through the same register of electricity production and payments settlements for surpluses injected into the grid.
Ultimately, the most effective way to reduce a company's carbon footprint is to first focus on reducing emissions through internal efforts, such as energy efficiency and switching to renewable energy sources, before considering the use of GO certificates or carbon credits to offset any remaining emissions. It is important to keep in mind that carbon offsetting should not be used as a substitute for emission reduction efforts, but rather as a complementary measure to achieve net zero emissions.
Here a comparison table for Guarantees of Origin (GO) and Carbon Credits:
| Criteria | Guarantees of Origin (GO) | Carbon Credits |
|---|---|---|
| Purpose | Verify renewable energy generation | Offset greenhouse gas emissions |
| Verification | Certifies the origin of electricity | Certifies reduction of greenhouse gas emissions |
| Eligible Projects | Renewable energy sources | Projects that reduce greenhouse gas emissions |
| Market Presence | Mostly traded on energy markets | Mostly traded on carbon markets |
| Market Value | Prices determined by supply and demand of renewable energy | Prices determined by supply and demand of carbon offsets |
| Regulatory Framework | Regulated at the national level by different authorities | Regulated at the national or international level, depending on the certification scheme |
| Impact on Climate Change | Increase renewable energy production and environment protection projects | Leads to GHG emissions reduction and climate change mitigation |