The pressing need to transition to cleaner energy has put the spotlight on the systems used to verify renewable energy achievements. Among these tools, namely Guarantees of Origin (GOs), have often found themselves at the centre of criticism and debate regarding their effectiveness in fostering genuine renewable energy adoption. However, such criticism frequently misunderstands the role of GOs and their crucial function in the energy transition. Far from being flawed, GOs form the backbone of renewable energy accounting, recognised by leading frameworks such as the Greenhouse Gas Protocol (GHG Protocol) and RE100. Their core purpose revolves around creating transparency, ensuring accountability, and eliminating double counting in energy markets; an area where they are frequently, yet unjustly, vilified.

To understand the true value of GOs, we need to look beyond misconceptions and acknowledge their role in securing a renewable future. At their essence, GOs are certificates that verify specific units of electricity generated from renewable sources, such as wind, solar, or hydroelectric power. Issued by independent authorities, these certificates are traded separately from the physical flow of electricity on the grid. This mechanism enables consumers to claim renewable energy use, even though the electrons reaching their operations are physically indistinguishable from those generated by non-renewable sources.

Electricity grids operate a model where electrons cannot be traced back to their specific origin. Given this, tracking the physical origin of electricity is practically impossible. GOs address this gap by providing a verified, market-based mechanism for consumers to support and claim renewable energy, irrespective of the physical electrons they receive. This distinction establishes the necessity of GOs in the pursuit of decarbonisation.

In fact, GOs are the primary tools explicitly recognised by European legislation to disclose the source of electricity supplied by distributors. Under the EU Renewable Energy Directive (RED II), GOs are mandated as the standard mechanism for certifying and communicating the renewable origin of electricity, ensuring transparency and consistency across all EU member states. This legal framework enables energy suppliers to guarantee the authenticity of their green claims, forming the foundation for green tariffs, green contracts, and Power Purchase Agreements (PPAs). For example, energy providers use GOs to certify the renewable energy supplied under these agreements, assuring consumers and businesses alike that their electricity is derived from verified renewable sources. Without GOs, the credibility and functionality of green energy markets across Europe would be significantly undermined.

In addition to enabling transparency, this system has driven widespread adoption of renewable energy across Europe. Consumers are increasingly able to make informed decisions, resulting in greater accountability among suppliers and distributors. As green tariffs and PPAs gain traction, GOs act as the backbone of this evolving ecosystem, ensuring trust and reliability in renewable energy markets.

To appreciate the role of GOs fully, and understand where the misinformation stems from, it is critical to understand the distinction between location-based and market-based methods of accounting for electricity emissions. Simply put, the location-based method shows the production in the country, while the market-based method reveals the actual contributions from domestic companies.

For instance, if a grid’s energy mix is 50% renewable and 50% coal, every domestic consumer is assigned emissions based on that same ratio, regardless of any specific actions they may have taken to support renewable energy. If the grid’s mix was 90% renewable and most GOs are exported, then the countries the GOs have been exported to will be unaffected in terms of the location-based method, while domestically, they will benefit. This approach provides a snapshot of the overall domestic renewable energy production reality.

In contrast, the market-based method, which relies on GOs, reflects the specific energy choices made by consumers. A company’s renewable energy claims are directly tied to the amount of GOs it purchases; if these purchases cover its entire electricity consumption, the company can legitimately claim its energy use as 100% renewable. In this way, the market-based method enables organisations to drive demand for renewables, thereby directly contributing to their development.

These two methods are not in conflict; rather, they serve complementary purposes. The GHG Protocol and RE100 recognise both approaches as gold standards for corporate sustainability reporting. The location-based method reflects the actual emissions footprint of the grid, while the market-based method provides insights into how organisations are contributing financially to renewable energy development. Together, they provide a comprehensive view of physical emissions and the impact of proactive renewable energy purchases.

The criticism that GOs allow for double counting often arises from a misunderstanding of these complementary accounting approaches. For instance, if a company purchases GOs to match 100% of its electricity consumption and claims it is fully powered by renewables, while at the same time the grid’s emissions factor shows 50% renewable generation, some may argue that the renewable energy is being counted twice—once by the company and once by the grid.

This argument collapses under scrutiny. The two accounting methods measure different aspects: the location-based method assesses the overall emissions intensity of the grid’s energy mix, whereas the market-based method reflects an individual consumer’s choice to support renewables financially. As long as both methods are reported separately, no double counting occurs, which is why the GHG Protocol explicitly encourages the use of both approaches to enhance transparency. Each method tells a different story; one about the actual composition of the grid, the other about individual commitments to renewables.

A practical example might make the point a little clearer. Consider a company consuming 100 MWh of electricity from a grid that is 50% renewable and 50% non-renewable. Through location-based reporting, the emissions intensity would reflect the grid’s mix. However, if the company purchases 100 MWh worth of GOs, it can report its consumption as 100% renewable using the market-based method. The company supports renewable energy through its market-based actions, while remaining connected to a grid that may still rely partly on fossil fuels. Together, these perspectives offer a fuller, more honest portrayal of both individual and systemic progress.

Further to enhancing consumer transparency, GOs serve as a key revenue stream for renewable energy producers and governments. When acquired through support schemes like feed-in tariffs, GOs are collected by governments and auctioned to the highest bidders. These auctions generate significant revenues, as demonstrated by countries like Croatia, France, Greece, Hungary, Italy, Luxembourg, and Portugal, which use their proceeds to offset renewable energy costs. This creates a self-sustaining funding mechanism that reduces reliance on subsidies or tax increases, while renewable energy producers gain a stable, predictable income stream that complements electricity sales and enhances project feasibility.

Additionally, GOs address a key limitation of electricity grids: the inability to trace electrons to their source. By decoupling the renewable attributes of electricity from its physical flow, GOs allow consumers to claim renewable energy use, even when connected to mixed-source grids. This supports accountability while empowering individuals and organisations to demonstrate meaningful commitments to sustainability.

By aligning financial incentives with environmental goals, GOs thereby accelerate the energy transition. They make renewable projects more financially sustainable, build consumer trust, and support innovation in renewable technologies. Far from being just administrative certificates or financial tools, GOs are necessary in the global effort to decarbonise energy systems and fight climate change.