Trading in guarantee-of-origin (GOO) certificates can play a key role in developing global markets for hydrogen and low-carbon gaseous fuels including biomethane, according to speakers on a gas industry panel yesterday.

The use of GOO certificates, which are already widely traded in electricity markets, can help to bring standardisation and liquidity to hydrogen markets, enabling industries to internalise the external cost of climate change. The certificates provide evidence to consumers that energy has been generated sustainably. Some 735.1TWh of renewable GOOs were cancelled in 2020, according to the Association of Issuing Bodies.

“It’s about combining future schemes to provide for electrons from renewables to be converted into hydrogen" Brabo, Gas Infrastructure Europe

“GOOs are easily tradeable due to their book-and-claim character. You can trade certificates in the underlying commodities independently of each other, and you can trade them across the Atlantic and Pacific,” says Gunnar Steck, executive adviser on wholesale markets at European gas industry association Eurogas. “And there is already a market infrastructure in Europe.”

Steck says industry needs visibility and a common currency to drive adoption of low-carbon fuels, which will play a major role in decarbonising the economy.

The role of GOOs and other tradeable certificates is potentially “very important” to the development of a hydrogen market, according to Tudor Constantinescu, principal adviser to the director general for energy at the European Commission.

“All these things are now on the table and up for discussion,” he says, noting that more work is needed on methodologies around the measurement of carbon footprints for the various hydrogen production routes on a European and global level.

Steck says the growth of a liquid hydrogen market will require regulators and government to provide a push for demand in the form of targets and carbon pricing.

The development of trade in GOOs for hydrogen would need to interconnect with existing schemes for electricity and gas, and be backed by legislation, according Torben Brabo, president of industry association Gas Infrastructure Europe.

“We need to see how these GOO schemes can be connected across the different energy systems,” he says. He calls for laws enabling GOOs to be traded across the supply chain from renewable power to hydrogen and into storage.

“It’s about combining future schemes to provide for electrons from renewables to be converted into hydrogen,” he says. This could be challenging from a legislative viewpoint, he adds, citing problems with initial legislation around gas GOOs in Denmark.

Undoing unbundling?

Legislation on the ownership of hydrogen production could also come under scrutiny amid calls from some to allow transmission system operators (TSOs) to own electrolysers, at least in the early stages of the market’s development. This would require changes to unbundling rules in force in the gas sector.

“At the beginning, to foster this hydrogen business, to gain some speed, it would be more than to wise to allow infrastructure partners to take part,” says Francisco de la Flor Garcia, director of international organisations at Spain’s Enagas. “When we are starting a business we need to share knowledge, share risk.”

735.1TWh – Electricity GOOs cancelled in 2020

In the longer term, electrolysers could be operated commercially in the way that LNG import terminals are, with companies competing for access.

Brabo calls for flexibility in writing the regulations for the emerging hydrogen market and warns against a “copy and paste” from the gas market.

“Development could be slowed if we are very rigid,” he says. “TSOs could own hydrogen production assets through subsidiaries for an initial period, especially in areas where there are not enough other companies investing in the sector.”

The Commission will “discuss” unbundling rules, Constantinescu says.

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Author: Stuart Penson