07 Jul 2017

Does the EU renewable energy sector still need a guarantees of origin market?

Jaap Jansen

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The European Commission’s Renewable Energy Directive of 2001 mandated EU member states to develop a system for the guarantees of origin (GOs) of renewable electricity. In 2016, this market had an estimated value of €120 million per year across the EU, of which €100 million was income for generators of renewable electricity. Yet the GO system has been criticised for lacking environmental credibility and having little impact. The current legislation of the GO instrument leads to an oversupplied GO market and a double-counting problem. This enables suppliers who want to launch renewable electricity products, and corporations seeking to make their electricity demand more renewable, to do so in a legally correct and cheap but environmentally questionable way, which leads to little or no extra generation of renewable electricity.

The author argues that well-designed reforms could address these weaknesses and provide additional, consumer-driven income streams to help realise new renewable energy projects in the future. He proposes a number of recommendations for action.

Jaap Jansen is a non-resident Fellow at CEPS – Energy Climate House.

No of pages: 9

CEPS Policy Insights offer analyses of a wide range of key policy questions facing Europe. As an institution, CEPS takes no position on questions of European policy. Unless otherwise indicated, the views expressed are attributable only to the author and not to any institution with which he is associated.

Available for free downloading from CEPS website (www.ceps.eu)© CEPS 2017

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