A key customer asks for proof that you use renewable electricity to make its products. Your next sustainability report also needs a lower Scope 2 result. A broker offers guarantees of origin that cover all your energy use within a few weeks, with no new solar panels. For some companies this is a sound decision. For others it is an extra cost that changes nothing in the grid.
- Guarantees of origin are worth buying: when a customer asks for renewable electricity or you need a lower market-based Scope 2 result fast.
- They add little: when electricity is a small part of your emissions or you report only location-based Scope 2.
- One guarantee: proves that 1 MWh came from a given source and counts only after it is cancelled for you.
- EU and UK: EU countries issue guarantees of origin, most under the EECS standard; the UK uses REGOs issued by Ofgem.
What are guarantees of origin?
A guarantee of origin (GO) is an electronic certificate. It proves that a given amount of energy was produced from a given source. One guarantee covers 1 MWh of energy. Guarantees exist for electricity, and also for heat, gas and hydrogen, including biogas and biomethane.
A guarantee does not mean that power from a wind or solar farm physically flows to your site. Electricity in the grid mixes, whoever uses it. The guarantee carries the environmental attribute of the energy: the information about where the energy came from. When the guarantee is cancelled for your company, this attribute is assigned to you. No one else can then claim the same megawatt-hour.
In the EU, guarantees of origin are based on the Renewable Energy Directive (RED II, amended by RED III). Each member state names a body that issues them and keeps the registry. Most of these registries follow the European Energy Certificate System (EECS) of the Association of Issuing Bodies (AIB). This lets you move guarantees between countries. A few EU countries, including Poland, still issue guarantees outside EECS. Trade across borders is harder there.
In the UK, the same role belongs to Renewable Energy Guarantees of Origin (REGOs). Ofgem issues one REGO for each MWh of renewable electricity. Since 1 January 2021, the EU has not recognised UK REGOs. Since 1 April 2023, suppliers in Great Britain cannot use EU guarantees in their fuel mix disclosure (Ofgem).
How do guarantees of origin differ from other energy certificates?
Guarantees of origin are often confused with other certificates. The main difference is their purpose. A guarantee of origin is a voluntary tool to disclose and claim the source of energy. Certificates from support schemes help to fund renewable plants. They do not let you claim renewable energy.
The table shows the instruments you will meet most often in Europe and beyond:
| Instrument | Where | Who issues it | What it is for |
|---|---|---|---|
| Guarantee of origin (GO) | EU and EEA countries | A national issuing body | Supplier fuel mix and the market-based method for Scope 2 |
| REGO | UK | Ofgem | Supplier fuel mix in the UK and the market-based method for Scope 2 |
| I-REC | Many countries outside Europe | Local issuers under the I-REC Standard | The market-based method where there are no national guarantees |
| Support scheme certificate, for example a ROC in the UK | Countries with a quota scheme | A national body, Ofgem for ROCs | Supplier obligations that fund renewable plants; not a claim of renewable energy |
How do guarantees of origin affect a corporate carbon footprint?
The most common use of guarantees of origin is in Scope 2 of a corporate carbon footprint. Scope 2 covers emissions from the electricity, heat, steam and cooling that your company buys.
The GHG Protocol is now revising its Scope 2 rules; we describe the planned changes in a separate article. The current Scope 2 Guidance sets out two methods:
- Location-based: emissions from the average energy mix where you use the energy, for example in a country.
- Market-based: emissions from the contracts and certificates you hold, including guarantees of origin, PPAs and supplier products.
In short: if you buy and cancel enough guarantees that meet the quality criteria, you can report a lower market-based Scope 2 result. For solar, wind, geothermal and hydro power, the GHG Protocol allows an emission factor of zero. These sources have no direct emissions where the power is produced.
Some companies also use guarantees for biomethane to report lower Scope 1 emissions from the gas they burn on site. This is not common practice yet, and few such guarantees are on the market.
We calculate all three scopes in our corporate carbon footprint service.
Types of guarantees of origin: not every guarantee is the same
Guarantees of origin differ by the technology that produced the energy. In practice, you will find guarantees for energy from:
- wind, sun, water and geothermal heat;
- biomass, biogas, biomethane and other biological sources;
- fossil fuels burnt together with biomass;
- waste incineration plants;
- high-efficiency cogeneration.
In reports and in marketing, do not treat all guarantees as equal. Customers and analysts usually trust guarantees from wind, sun, water or geothermal heat more. Guarantees linked to biomass, biogas, co-firing, waste or cogeneration raise more questions.
How long is a guarantee of origin valid?
Guarantees of origin have a limited life. Under RED II, a guarantee is valid for 12 months after the energy was produced. A guarantee that was not cancelled expires no later than 18 months after production (Directive (EU) 2018/2001, Article 19).
So match your guarantees to your reporting period and to your real energy use. The most common ways to buy are:
- After the year ends: you know your real energy use and buy the exact number of guarantees.
- In advance: you buy for your planned energy use and secure the budget early.
What affects the price of guarantees of origin?
The price of guarantees of origin depends on three main factors:
- Energy source: decide whether you accept only wind, solar and hydro power, or also biomass and cogeneration. A narrower choice usually costs more.
- Volume: the more you buy, the lower the unit price you can negotiate.
- Production date: guarantees close to the end of their validity are usually cheaper.
Prices change with supply and demand, and brokers quote them per MWh. The cheapest option is usually guarantees close to expiry, with no limits on technology.
This carries a risk. If demand rises fast, there may not be enough guarantees left at the end of the year. A safer way is to buy guarantees for 50–70% of your expected use in advance. You then buy the rest after the year ends, when you know the exact amount.
What information does a guarantee of origin contain?
Under RED II, each guarantee of origin states at least:
- the energy source and the start and end dates of production;
- whether it covers electricity, gas, hydrogen, or heating and cooling;
- the name, location, type and capacity of the installation;
- whether the installation received investment support or other public support;
- the date the installation started to operate;
- the date and country of issue and a unique number.
When the guarantee is cancelled for your company, the registry issues a cancellation statement. Check that it names your company as the user of the energy. It should also show the volume, the production period and the country of consumption. Keep this statement as evidence for your auditor or verifier.
When is it worth buying guarantees of origin?
Guarantees of origin make the most sense when your company has a clear business or reporting reason. Consider buying them if:
- you want to lower market-based Scope 2 emissions quickly;
- a key customer asks for proof that you use renewable electricity;
- you report on sustainability and want better data on your energy;
- you must cut greenhouse gas emissions but cannot invest in your own renewable plant: guarantees are an operating cost, not an investment;
- you need a solution that you can put in place within days or weeks.
Speed and ease are the main advantage of guarantees. A solar installation needs a technical study, capital and time. A PPA means a long-term contract. You can match guarantees to your energy use much faster.
When may guarantees of origin make no sense?
Guarantees of origin are not always the best answer. Buying them may be hard to justify if:
- electricity is not a significant source of your emissions;
- you report Scope 2 only with the location-based method, so guarantees will not lower the result;
- your customers do not ask for proof of renewable electricity;
- you need real cuts in operational emissions, not only a better market-based result;
- the guarantees are not part of a wider decarbonisation strategy.
The biggest risk is to treat guarantees as a replacement for a decarbonisation strategy. They should not play this role. They are a tool to report and prove where your energy comes from. They do not replace energy efficiency, your own renewable energy, PPAs or cuts in process emissions.
Guarantees of origin, PPAs and your own renewable energy
Guarantees of origin, PPAs and your own renewable plants answer a similar need in different ways.
Guarantees of origin are the fastest and simplest. They quickly cover your energy use with a renewable attribute. But they do not change how your site is supplied, and their cost grows with your energy use.
A PPA is a long-term contract for power from a specific plant. It gives you a closer link to real renewable output. It also lets you control the price of energy, so it is not only an extra cost.
Your own renewable plant can cut energy costs and the amount of power you take from the grid. But it needs capital, space, a technical study and time. In the long term, it lowers your real cost of energy.
In practice, these options can work together. You can buy guarantees for your current reporting needs. At the same time, you can study a PPA or your own plant as a long-term step.
Frequently asked questions
Does a guarantee of origin mean that renewable power flows to my company?+
No. A guarantee proves the origin of the energy as an attribute. It does not mean that power from a renewable plant is physically delivered to your site.
Can I use a guarantee of origin issued in another EU country?+
In principle, yes. Guarantees issued under the EECS standard can move between registries across Europe. But check the rules of the standard or the customer you report to. Some expect guarantees from the country where you use the energy.
Do guarantees of origin lower my carbon footprint?+
Yes, but only your market-based Scope 2 result. Make sure you buy real guarantees of origin cancelled in an official registry, not a supplier's own marketing certificate.
Do guarantees of origin lower location-based emissions?+
No. The location-based method uses the average energy mix of a region. It does not take individual market instruments into account.
Can guarantees of origin lower Scope 1 emissions?+
Only if you hold cancelled guarantees for the gas you burn, for example biomethane. In practice, few such guarantees are available.
Can I cancel guarantees of origin to lower my Scope 3 emissions?+
No. A guarantee is cancelled for the final user of the energy and counts in that user's Scope 1 or Scope 2. Your Scope 3 falls only when your suppliers lower their own emissions.
What is the difference between buying and cancelling a guarantee of origin?+
Buying is only a trade: you get the rights to the certificate. Cancelling removes it from the market for good. Only then is the renewable energy assigned to a specific final user and to the energy use you report.
Are guarantees of origin carbon offsets?+
No. Guarantees of origin are not offsets. They prove the source of energy and count towards Scope 1 and 2. Offsets compensate emissions by funding reduction projects outside your own business. We describe carbon credits, their prices and their quality in a separate article.
Sources
- AIB: European Energy Certificate System (EECS)
- Directive (EU) 2018/2001 on renewable energy (RED II, consolidated text with RED III)
- Ofgem: Renewable Energy Guarantees of Origin (REGO)
- GHG Protocol: Scope 2 Guidance
Are you thinking about buying guarantees of origin?
Guarantees of origin are only one part of your energy costs and of your Scope 2 result. Before you buy, compare them with a PPA and with your own installation. Then check how each option affects your reduction target and your budget.