Consumers’ demand for using renewable energy and their interest in reporting their consumption has given rise to so-called “book and claim systems” in various parts of the world. These are Energy Attribute Certificate systems, such as the Guarantee of Origin system in Europe and the RECs in the USA. If you are familiar with the European Guarantee of Origin (GO) system, it’s likely that you have heard about the European Energy Certificate System (EECS) rules, which are set by the Association of Issuing Bodies AIB) and applied by its members.
These rules set a voluntary standard for Guarantees of Origin schemes so that certificates from one AIB member country can be easily and reliably transferred to another AIB member country. However, AIB membership is voluntary and while most EU Member States are also AIB members, not all are. This is why the new Renewable Energy Directive doesn’t refer to the EECS rules in the article about Guarantees of Origin, but to a European standard on GOs (CEN EN 16325) which is currently being updated to reflect the latest European legislation.
Reliable tracking and compatibility with internationally accepted market mechanisms are among the criteria of the EKOenergy ecolabel. For this reason we observe and follow the development of different schemes around the world to guide EKOenergy users to the available best practices.
To offer some insight into the CEN Standard process, we had a chat with Katrien Verwimp from the AIB and Adam White from RECS International regarding this consensus process affecting the European GO market.
EKOenergy: What is the EECS and what will the CEN Standard be?
Katrien Verwimp (AIB): EECS stands for the European Energy Certificate System, developed in the Association of Issuing Bodies (AIB) over the past 2 decades. The AIB and RECS International used to be one organisation. But as the system grew, it was decided that there should be independence between market participants and system operators. The European Energy Certificate System has developed from the bottom up by RECS International on the market side and the AIB on the system side as a generic certificate system for all energy carriers (such as electricity and gas). It provides a voluntary standard for managing a commonly accepted, reliable certificate system. It enables the cross-border transfer of the certificates in a standardized way, which leads to efficiency in handling and also ensures trust. From 2001 onwards, this voluntary system was partially codified in European law by subsequent Renewable Energy Directives.
The EECS Standard is built on the EECS rules, created by the issuing bodies together. The Guarantees of Origin (GOs) is one of the types of certificates managed by the EECS rules. By now, there are 26 countries that are connected to this EECS system, amounting to 29 issuing bodies as AIB members (as Belgium has 4 issuing bodies).
The EECS rules consist of generic rule sets containing the main principles as well as some subsidiary documents which elaborate further on several aspects. Then there are “fact sheets”, offering another layer of more dynamic information such as country codes, energy source codes, codes for the transfer hub… Technology codes can also be added. There’s quite a lot of dynamic information to be maintained as well, and the EECS rules include the concept of domain protocol, which is also a standardized document in a standardized template but every country has its own. In a domain protocol for a specific geographic domain, the issuing body that is responsible for that domain elaborates the rules and principles of its own system. And a domain protocol is basically a part of the EECS system as well. In a domain protocol there is also a quality management system where there is a peer review by the AIB members and professional reviewer from the AIB who checks regularly, every 2 years.
“While the EN16325 standard aims to ensure that GOs in all countries are reliable, details for efficient operation are jointly agreed between the issuing bodies in EECS”
How does that link to the CEN standard? The Standard will set rules for GO systems in all countries of the European Internal Market (EU Member States and the other European Economic Area countries (Norway, Iceland, and Lichtenstein). In addition to the European Economic Area, the EECS scope also includes Switzerland and the contracting parties to the Energy Community. The EECS rules apply to AIB member countries, including a large majority of internal market countries (but not all – e.g. neither the UK nor Poland) and some non-internal market countries such as Switzerland and Serbia. EFTA countries and contracting parties of the Energy Community are within the geographic scope of the AIB. In Article 19 of the Renewable Energy Directive, there is an obligation that from 1 July 2021 the Guarantee of Origin systems of all European Internal Market countries should comply with the EN 16325 Standard of Guarantees of Origin. The existing EN 16325 Standard was set up in 2013 (and slightly revised in 2015) based on the EECS standard, and it’s for electrical energy only, while Guarantees of Origin have now been opened up to include renewable energy from all energy carriers. So there’s the need for a revision of the EN 16325 Standard and that revision process has kicked off in CEN in the beginning of 2020. And this process is still ongoing.
|The European Committee for Standardization (CEN, French: Comité Européen de Normalisation) is a public standards organisation whose mission is to foster the economy of the EU by development, maintenance and distribution of coherent sets of standards and rules. CEN’s thirty-four national members, representing Member-States and Accession Countries, work together to develop these European Standards in various sectors.|
AIB is leading the FaStGO project to support the development of a revised certification standard for Guarantees of Origin that can accommodate different energy carriers
In order to help speed up that process, DG ENER has issued a service contract which has led to the set up of a project called FaStGO. FaStGO is a project being led by the AIB. There are many relevant organizations contributing their expertise including the RECS International, ERGaR, Hinicio representing CertifHy, European Biogas Association, Grexel, Gaia Consulting, CertiQ, European Energy Exchange. These organizations together work on several tasks, one of which has been to provide a text proposal for a revised EN 16325 Standard. While this FaStGO text proposal is integrated in the committee draft in CEN, that standard and the content of its revision, of course, will only be final when there is a consensus reached in CEN. And we are not at that stage yet. However, the FastGO text proposal has been broadly consulted with market parties.
You can also consult the 285 pages consultation responses and the reports on the take-aways from that consultation. This resulted in a text proposal from FastGO that was published on the 8th of July 2020. The basic components of that text proposal are very similar to the content of the EECS rules. That means, in terms of setting up a generic certificate system that was for all energy carriers and having separate sections per energy carrier and also a lot of learnings and the strengths of the EECS rules have been incorporated there.
Of course there are peculiarities per energy carrier to take into account and that can be done in dedicated sections per energy carrier. That is the approach agreed upon in CEN. CEN Standards aren’t easily adaptable, so anything that’s in there will remain for quite a while. That is different with the EECS Rules, which the Issuing Bodies jointly modify upon consensus in line with changing needs. These changing needs are the reason why dynamic information, most of which is maintained in the fact sheets and the subsidiary documents of the EECS rules, are advised not to be incorporated in the CEN Standard because the market may need more agile adjustments while it’s developing itself, especially for the new energy carriers. Also after a mandatory CEN standard is implemented, it still makes sense for the issuing bodies to have a platform to support their practical operation. Apart from being a platform for exchange of experiences and co-development of ever more fine tuned rules, an important part of the EECS system is a communication hub for cross-border transfer. The data protocol and IT system and related agreements are better left to a voluntary standard and contractual framework which is more flexibly adaptable, rather than integrating it to a very rigid standard which has its strength in its robustness but cannot be easily modified up to changing needs. In short, while the EN16325 standard aims to ensure that GOs in all countries are reliable, details for efficient operation are jointly agreed between the issuing bodies in EECS.
The CEN Standard will lay out the rules to determine what makes a GO system reliable and accurate
What is the reason for developing a new Standard for the Guarantees of Origin?
Adam White (RECS International): For market participants it’s all about having confidence in the market and being able to operate efficiently in a single market, across jurisdictions. I’m sure you know from EKOenergy as well, what becomes difficult is that there are different rules in different countries for expiry dates or who can have an account, so on and so forth, and our contribution to FastGo and to the CEN process as a whole is to try and minimize those differences between Member States, but some will likely remain. So it’s really an effort to increase standardization and harmonization as far as possible. The fact that the standard is written into Article 19 of the REDII is a big step forward but it won’t be a complete harmonized system once it comes into force, so there’s still work to do.
Katrien: I definitely endorse what Adam says. Standardization really helps and enhances efficiency of market operation hence lowering the cost of market operations, but it also enhances a minimum quality level. According to the Renewable Energy Directive, Member States are obliged to import Guarantees of Origin if a market party asks for it. So the issuing body has to arrange for that import and can not just refuse it. It can only refuse it based on criteria of reliability and accuracy and the standard is seen as a common understanding of these criteria. That brings up the question: When is a GO system facilitating a sufficient level of accuracy, reliability and veracity? So this is something to be elaborated in CEN.
Adam: The GO system is relatively complicated for end-users to engage with, and even well resourced end-users can find it difficult to understand. This includes the fundamental point of needing to separate the attributes of a unit of energy, as represented by a GO from the underlying physical energy. And so, the clearer and more straightforward the standard can be, the better. Obviously there are a lot of details to be included in its principles, that’s why I say it’s really important for all participants big and small, including aggregators and households, to have confidence that the standard exists and is respected across borders. Because when you have a complicated product, then the governance behind it also seems to be complicated and people can lose confidence, so I think it’s very important.
Can you give some examples of the main topics of discussion at CEN?
Adam: One of the outstanding topics is certification for energy which is mainly consumed before it reaches the public grid, that’s often known as “on-site / off-site”. I can only speak from RECS’s perspective, because it’s a live discussion now and there’s a lot of different opinions. From RECS’s perspective, representing our members, we feel that all energy that is properly metered, and that’s a discussion in its own right, should be certified. If energy is maybe consumed before it reaches a public grid, then this should be clearly communicated through a data field on the GO, so that consumers can identify what kind of energy they want to buy. Finally, following intensive discussions, the current draft revision of the standard includes a proposal for such a label on the dissemination level of the energy.
Katrien: I can confirm that it was a heavy discussion, and that there were strong views on several sides of that discussion. But I think Adam summarized the contents of the discussion very well. For AIB, the most important aspect of the whole story is to maintain a reliability of the claim towards consumers. So, in whatever way that can be organized, we’re looking for solutions. The main thing here also relates to the fact that there is a concept like residual mix in the electricity sector. Organising a reliable tracking system is also a matter of how the origin of energy for which no GOs are cancelled, is disclosed to consumers. This brings in the concept of the residual mix. Both the production and consumption data are being taken into account in the calculation of the residual mix, hence they are also being taken into account in the discussions in CEN.
Another point of discussion in CEN is regarding blending hydrogen into the gas grid and tagging this information on the GO for transparency. It comes with interpretation of GO usage rules that are today not explicit in the standard and that relate to design of the future gas and hydrogen market.
Is there a consensus to standardise the calculation of residual mix across Member States?
Katrien: There is not a tendency to include the details of the residual mix calculation in CEN but in the FaStGo proposal there are some main headlines to be included in there and also in the FaStGo project there is a task package 4 that relates to the residual mix. Residual mix calculation, which is a service that AIB provides to balance out the residual mix calculations across countries. The methodology has been slightly adapted for the electricity residual mix and FaStGo process offers an opportunity to consult that with a wider audience and a wider number of stakeholders and confirmed that a change of methodology was a good idea. So that’s one aspect in terms of residual mix and another aspect within FaStGo is looking at the headlines for the concept of residual mix for other energy carriers, but this is an ongoing process.
|Residual mix refers to what is left over once the volumes represented by sold GOs are extracted from the total amount generated.|
How do you see the general timeline of this process?
Katrien: The CEN process is a consensus process, and it’s hard to predict when a sufficient level of agreement will be reached. However, I don’t think that there will be a finally confirmed and voted CEN Standard much before the legal implementation deadline of Article 19 of the Renewable Energy Directive.
The EECS rules are publicly available. Will the CEN Standard be as transparent?
Katrien: No, the CEN Standard will be available for purchase. Everybody can buy it, but the issuing bodies will need to comply with it, if they are named for implementing Article 19 as an issuing body of Guarantees of Origin. The Member States will need to guarantee that they have implemented the CEN Standard.
CEN is also working on a standard for gas and heat. Does that mean that there will be 3 different standards, or will there be one that applies to the GOs for all different types of energy?
Katrien: There has been an agreement that there will be a generic standard for all Guarantees of Origin with specific sections per energy carrier. There’s a good reason for putting it all in a single standard and that is because of the concept of energy carrier conversion, such as biomethane being converted into electricity, electricity can be converted into hydrogen and hydrogen can be converted back into electricity, or any other direction. The original energy source that is on the first Guarantee of Origin, shall be maintained on the GO that is issued after energy conversion. For example energy source “biomass from agriculture” on the biomethane Guarantee of Origin would be maintained on an electricity GO, if the biomethane is converted into electricity and a corresponding biomethane GO would be cancelled for it. In this example, electricity GOs can only be issued for the amount of measured electricity production, while an amount of biomethane GOs to be cancelled shall correspond to the measured input of methane into the electricity production device. Basically there can be a conversion of GOs when there is a physical energy carrier conversion. In order to ensure that these Guarantee of Origin systems for the different energy carriers are compatible and to ensure the avoidance of double counting, there is really a need for a generic GO system with the same type of data fields and processes.
How do you see the role of the AIB (Association of Issuing Bodies), the developer of the EECS Standard, in this new setting and the following stages of consensus?
Katrien: AIB has always been a solutions provider to its members, and it continues to be so. In addition to this formal standard, there are continuous needs for detailed implementation agreements which are subject to flexible demands so keeping on harmonizing and standardizing the details still makes sense to establish efficiency. In addition, AIB provides a robust discussion forum for issuing bodies to come to joint agreement. AIB even has a standardised decision-making process amongst these issuing bodies, for an constantly ongoing improvement process. Furthermore, AIB also facilitates an efficient IT solution for this cross-border transfer, which is also an appreciated service by its members.
AIB membership has always been voluntary and it can be seen as an opportunity that the formal standard at least synchronizes the quality level of the principles they ensure in the GO schemes, including countries where the issuing body is not an AIB member.
There are non EU members of CEN, some of these countries outside the single market are looking to join the EECS GO system while some are adopting the I-REC standard. Does adopting the EECS GO standard guarantee access to the single market for GOs? Would CEN membership affect this in the long run?
Katrien: In the long run, it’s adding efficiency if the CEN Standard is applied in a broader area than only where the Renewable Energy Directive is applicable, however the European legislative framework of course poses some extra guarantee levels on quality, reliability and avoidance of double counting, also in relation with supplier claims. So it’s basically the European legislative area that is restrictive, rather than the Standard itself.
The European Renewable Energy Directive has its limited geographic scope, especially on imports. In CEN, there are also discussions on whether or not there should be restrictions on exports because there’s of course the question of attribute leakage out of this closed disclosure system, keeping on guaranteeing the reliability of the European regulated origin disclosure systems towards consumers.
Adam: We see it with Switzerland and possibly with the UK when it comes to Brexit and basically the position of the EU has been that you have to have an overarching trade agreement in order to achieve mutual recognition of GOs between the EU and third countries. So even the Swiss arrangement of multiple bilateral agreements, because the current Swiss arrangement is in different product areas, isn’t sufficient to achieve mutual recognition and the right to export GOs to the EU.
Looking at where the negotiations are going at the moment, it doesn’t seem like it’s going to be an overarching trade agreement between the EU and the UK. So, if the UK fails to follow the Swiss example and says in return “UK consumers can’t import from the EU because you’re not allowing us to export to you”, that could have a big impact on the market, because the UK imports about 60 TWh worth of GOs from the single market at the moment. And if that flow is switched off, that’s approaching 10% of the whole demand for EU Guarantees of Origin. So, in a way the hope is that the UK would do what Switzerland has done and allow imports still.
But I think the message for countries outside of the EU Internal Market is clear. There is a high barrier to being able to export GOs to the Internal Market, and membership of the AIB and following the EECS rules is not enough. This is important to take into account, because I think it can be difficult for third countries to understand the difference between the CEN Standard and European law and the EECS rules. You can become a member of the EECS system and fully apply all the EECS rules and assume you are part of the European Internal Market but you’re not. Under the new Renewable Energy Directive, you still have to achieve mutual recognition. And the EU, at least for Switzerland, and possibly for the UK as well, has set a high barrier that many other countries would fail to overcome. While none of this is official yet, it seems from the current situation for Switzerland that you have to have an overarching trade agreement that exceeds the level of integration of Switzerland into the Internal Market. And that’s not easy for countries to achieve because then you’re suddenly talking about your whole economy, having trade negotiations with the EU. So it’s quite an extra challenge to put into place, and despite Switzerland having probably one of most stand out, sophisticated and well-developed EECS GO systems, it is going to fall out of the EU official GO single market as of next year.
From RECS’s message to our members we would say, if you’re outside of the single market, then you have options that you need to understand in terms of what GO system you look to adopt and it’s important to understand that even if you fully implement the EECS GO system you don’t necessarily have access to the European single market for GOs. So if you’re looking to export, like Morocco for example, it’s particularly important for them to understand. Even more so than for Switzerland and the UK, who are net importers and who can therefore limit the impact of the EU’s approach by unilaterally allowing the import of Single Market GOs into their country.
Katrien: Based on these arguments I can add that this also came up in the FaStGO consultation when FaStGO was drafting its text proposal for a revised EN16325 Standard, that’s why in the final FaStGO text proposal for that standard the export restrictions and import restrictions are proposed to be based on technical rather than political criteria and that they should aim at ensuring the avoidance of double counting rather than be part of a political agreement in itself. So the main reason for restricting imports and exports is basically the avoidance of double counting, in order to guarantee the reliability of the system. Organising for the avoidance of double claims is related rather to technical criteria and that’s why the text proposal gives some attention to facilitate that for different energy carriers. It implies a check whether or not there is a residual mix and how the disclosure is regulated in the corresponding country.
Would it be correct to say that despite the varying opinions, there is a common understanding that standardisation is needed?
Katrien: I think the AIB is a living proof of the value of standardisation. This market size AIB is facilitating is simply an illustration of that. When you start a market, especially now with the new energy carriers, in the initial transfers you can do things bilaterally with manual agreements and I remember doing that also 17 years ago. But once you move into multivolume markets, standardisation is essential otherwise the cost of manual handling will simply jeopardise market development.
We are immensely thankful to both Adam White and Katrien Verwimp for answering our questions about the CEN Standard process. We are happy to see this process unfold and hope it will result in an efficient, robust market in Europe that serves as an inspiration in the other parts of the world.
To learn more about the concrete results the EKOenergy ecolabel brings, see our results and our announcement of EKOenergy’s Climate Fund contributions exceeding 1 million euros in 2020. To get an overview of the role ecolabels play in the renewable energy market, see our article titled „Ecolabels and what they bring to the energy market„. You can learn more about EKOenergy’s requirements regarding energy tracking here.