Friday, 12 July 2019
Norway has an abundance of renewable electricity, reaching 98% of production according to NVE. However, domestic demand for Guarantees of Origin (GOs) is scarce and most GOs are exported to other EU countries such as Germany, UK and the Netherlands.
Norway is connected to the European power market both physically and financially. Hence, both electricity and money flows across the borders. However, due to physical laws, most of the electricity that enters Norwegian households will come from the renewable electricity produced in Norway.
Nonetheless, only 9% of Norwegian consumers purchase electricity backed by GOs. This means that 91% of Norwegian households funnel their money to coal, gas and nuclear power producers without being aware of where their money ends up according to Tom Erik Olsen, Head of Trading at Ishavskraft.
The physical electricity delivered to a given household will remain the same regardless of whether a household purchases GOs or not. However, the environmental footprint will be different. An average household that does not purchase GOs will have an annual CO2 footprint of 10.4 tonnes, the equivalent of driving 106,000 km in a petrol car.
In Europe, there is more focus on documenting that the quantity of renewable electricity consumed has actually been produced by renewable sources. This creates substantial demand for Guarantees of Origin and creates a market for the export of Norwegian GOs. This is especially the case in the industrial and manufacturing sector.
“When almost all GOs are exported, Norwegians can no longer claim their electricity consumption to be renewable. This also means that we have to consider ourselves part of the CO2 emissions from coal in Europe” according to Olsen.
There is currently political disagreement regarding how the GO scheme should continue to be implemented in Norway. The Ministry of Petroleum and Energy is currently assessing whether the current GO scheme can be improved, which was initiated last year.
Ishavskraft states that if Norway wants to reach the climate goals set by the EU Commission regarding the reduction of CO2 emissions, it would be unwise to dismantle a scheme which contributes to making the production of renewable electricity profitable. Incentivising producers to build more renewable production is what is needed to phase out coal and nuclear production in Europe.
Tom Erik Olsen highlights that “Ishavskraft is proud to account for approx. 12% of Norway’s purchase of GOs. Although few households in Norway purchase electricity backed by GOs, we [Ishavskraft] are convinced that more [consumers] would demand GOs if more was known about the GO-scheme”.