Exploring the effect of Guarantees of Origin on the decarbonization of corporate electricity procurement: A case study of Germany and Norway

Abstract

Increasing social, economic, and political pressure causes many companies to pledge to decarbonize. A common measure involves the use of Energy Attribute Certificates (EAC), such as the European Guarantees of Origin (GO), to reduce emissions from electricity procurement (Scope 2). However, previous studies find no effect on additional renewable energy capacity. Focusing on Norway and Germany as dominant contributors to net GO exports and imports, this study examines the GO trade alongside corporate carbon accounting data to answer the research question: Does the decarbonization of corporate electricity procurement using Guarantees of Origin contribute to the expansion of renewable electricity generation capacity in Norway and Germany? The analysis of CDP and Association of Issuing Bodies data reveals Norway's consumption mix is more carbon intensive than Germany's because Norway exports GO and imports fossil electricity attributes. German companies report predominantly market-based approach, mainly using green tariffs and GO for zero emission claims, while Norwegian companies favor the location-based approach. The largest share of GO issued in Norway comes from hydropower plants aged 41 to 70 years. The results highlight the urgency to revise corporate carbon accounting standards. GO lack additionality due to double counting of renewable attributes. Potential solutions include additionality criteria, GO trade restrictions based on physical capacities, and age limits for eligible power plants. This study's novelty is linking CDP data with GO trade, to assess the integrity of corporate decarbonization strategies. It contributes valuable insights to ongoing discourse on the role of EAC.