Hydrogen Guarantees of Origin (GoO)
Understand Hydrogen Guarantees of Origin and how they can drive decarbonisation in Britain, build trust and grow a renewable hydrogen market.
Understanding Hydrogen Guarantees of Origin
As the hydrogen market develops and the role of this energy source in network decarbonisation takes shape, greater attention on its sustainability credentials is expected.
With a variety of production methods, from green hydrogen to the more carbon-intensive grey hydrogen, organisations need to demonstrate the environmental impact of their hydrogen energy sources.
Here, we outline the purpose and benefits of hydrogen Guarantees of Origin and how a certification scheme could build trust in a decarbonised energy system and grow a hydrogen market.
Understand the Hydrogen Rainbow
What is a Guarantee of Origin for hydrogen?
A Guarantee of Origin (GoO) is a certificate that verifies the renewable source of energy and helps suppliers and consumers comply with sustainability targets. While a hydrogen GoO scheme hasn’t been established in Britain, certifications are available in the EU.
A hydrogen GoO certification in Britain's energy market could function similarly to the renewable schemes in the electricity market, providing confidence for consumers and suppliers purchasing low-carbon hydrogen.
It could enable organisations to select their preferred type of hydrogen gas and hold certification to guarantee the source and its carbon emissions. It would also be a mechanism for tracking the environmental impact of hydrogen energy consumption. This is likely to become mandatory for businesses as the UK progresses towards net zero by 2050.
The purpose of hydrogen GoOs
During the UK's transition to hydrogen, associating a climate value premium with the lowest emission hydrogen products will be essential. However, once gas is injected into the pipeline system, it is impossible to differentiate or trace where gas molecules go or have come from. This is where GoOs can drive value for decarbonisation, build trust and market confidence.
The emissions benefits of hydrogen vary based on its production method. Blue hydrogen, made by reforming natural gas with carbon capture, is low-carbon. While green hydrogen, produced via electrolysis using renewable energy, has zero emissions.
If decarbonisation is the key driver for developing hydrogen products, the supply chain must disclose their carbon value to give end users visibility. End users can use this data to inform whether they either reduce emissions or buy allowances, under the current UK Emissions Trading System (ETS).
If the Government recognises GoOs in their accounting rules, companies could use them to claim lower emissions in their ETS reporting. This could reduce their liability under the ETS by demonstrating that they have substituted grey hydrogen with certified green or blue hydrogen.
As such, we may see GoOs become tradable or integrated within the ETS, creating a market signal for low-carbon hydrogen demand.
The emissions benefits of hydrogen vary based on its production method. Blue hydrogen, made by reforming natural gas with carbon capture, is low-carbon. While green hydrogen, produced via electrolysis using renewable energy, has zero emissions.
If decarbonisation is the key driver for developing hydrogen products, the supply chain must disclose their carbon value to give end users visibility. End users can use this data to inform whether they either reduce emissions or buy allowances, under the current UK Emissions Trading System (ETS).
If the Government recognises GoOs in their accounting rules, companies could use them to claim lower emissions in their ETS reporting. This could reduce their liability under the ETS by demonstrating that they have substituted grey hydrogen with certified green or blue hydrogen.
As such, we may see GoOs become tradable or integrated within the ETS, creating a market signal for low-carbon hydrogen demand.
Hydrogen will likely play a role in the UK's transition to clean energy and achieving net zero targets. The UK Government is exploring hydrogen's potential for power, storage and heat decarbonisation.
However, the energy industry remains uncertain of its benefits. A hydrogen GoO scheme could assure its sustainability, enhancing transparency and building market confidence among end-users and investors.
Similarly to renewable electricity power purchase agreements (PPAs), hydrogen producers could offer hydrogen supply agreements bundled with GoOs. This would give customers contractual assurance of the verified decarbonisation value of any purchased hydrogen, even if the molecules are delivered via a blended pipeline.
These agreements could:
- Lock in pricing and volumes
- Secure access to green hydrogen GOOs
- Help companies hedge against future carbon costs
As such, GoOs and other contractual commitments are key to building market trust and subsequently replacing producer subsidies.
The development of a hydrogen GoO scheme could also provide an additional revenue stream for gas producers. Plus, it would help demonstrate positive market signals and justify the expansion of hydrogen production facilities.
For end users, GoOs are a creditable, audible way to decarbonise their Scope 1 emissions. This is a priority for many, especially those in energy-intensive industries. With GoOs, businesses can claim the use of low-carbon hydrogen against Scope 1 emissions in sustainability reporting and carbon accounting frameworks.
As such, they offer a tangible way to demonstrate progress toward Net Zero commitments, enhancing transparency with investors and regulators. Also, their products made with low-carbon hydrogen can carry “green steel” or “clean ammonia” labels, which is increasingly attractive in global supply chains.
Overall, GoOs could act as a market mechanism to incentivise low-carbon hydrogen production and support the UK’s decarbonisation goals.
How hydrogen GoOs could work in the UK
As hydrogen becomes central to the UK Government’s clean energy strategies, establishing a recognised certification scheme is looking increasingly necessary.
In 2023, the former Department for Business, Energy & Industrial Strategy initiated discussions on the UK's first globally recognised certification scheme for low-carbon hydrogen, laying the groundwork for future developments.
Before this, the National Gas Transmission began exploring a hydrogen GoO scheme for the UK. Their work drew valuable insights from successful certification schemes across Europe, including CertifHy, and the UK’s Green Gas Certification Scheme. Key recommendations can be found on page 46 of National Gas' final GoO report.
Proactive discussions around implementation and identifying suitable industry bodies for issuing certifications must continue. This will ensure Britain’s gas industry is well-prepared as further policy frameworks (aligning with the Clean Power 2030 Action Plan) emerge, facilitating a smooth transition towards a decarbonised energy mix.
What part will the UK Low Carbon Hydrogen Certification Scheme play?
Published in December 2024, the Government’s Hydrogen Strategy Update confirmed that Version 4 of the Low Carbon Hydrogen Standard was being developed. After receiving consultation responses, it also set out that a detailed design of the Low Carbon Hydrogen Certification Scheme would continue.
By setting the maximum level of greenhouse gas emissions and verifying the environmental credentials of hydrogen production, this scheme will work alongside GoOs to help businesses and producers maintain compliance. This will build trust and drive market investment into hydrogen, eventually leading to the replacement of producer subsidies.
Get in touch
If you want to know more about the project, please email us at decarbonisation@xoserve.com.