Raison d’être of the twenty-year-old GO

Raison d’être of the twenty-year-old GO

Before I take out my crystal ball and predict what the next 20 years hold in store for GOs, I would like to take a moment to think about why the world needs GOs here and now. Of course, there are millions of things I could write about, but I wanted to take the viewpoint of GOs’ impact through energy consumers.

The magic of the GO

Contrary to the header, it is important to highlight that GOs are not a magical silver bullet. On their own they will not lead to a 100% renewable energy mix or solve the climate crisis for supper. They are a piece of a very large energy policy puzzle consisting of support schemes, emissions trading, offsets, tax reductions and the likes. This entirety will hopefully lead us to the aforementioned results.

However, GOs are magical in the sense that they bring energy consumers into the equation of energy production and policy. They facilitate a choice over one energy origin to another, which not only tells us what the energy consumers want (enough to be willing to pay for it), but also what they don’t want. Slowly but surely, these choices will lead the way of the future as they leak into the design of the energy system and other policy instruments. They constitute a loud voice of the companies and people asking for a greener energy future. In the complex energy and finance system of today, it is important to realize that is always a sum game, which can never be attributed to single factors individually.

Companies striving for carbon neutrality

Carbon roadmaps are very much in fashion in the industry, and rightfully so. What’s also delightful is that companies are not only setting ambitious carbon goals, but also directing enough resources to reach their targets. These roadmaps would not be possible to make or realize without market instruments such as GOs and offsets. Frankly speaking, the human mind only understands a single short- or long-term target: 0 (, or carbon neutrality). Reaching that target requires a whole lot more than just emission-free energy, but without the possibility to acquire it, the target would be unattainable for many and thus water down the whole point.

This is a great donkey bridge to Porter’s hypothesis. Porter’s hypothesis claims that contrarily to the intuition “strict environmental regulations can induce efficiency and encourage innovations that help improve commercial competitiveness”. My experience from working together with companies using GOs for their energy is analogous. Having control over one’s energy origin gives the motivation and necessity to also improve other environmental performance indicators to reach one’s goals. I’ve seen that gradual improvement of the energy mix is often one of the first steps on the road to carbon neutrality, but instead of discouraging further steps, it fuels them.

It’s all about choices

Besides energy consuming companies and the society, there are naturally other winners from GOs. For energy suppliers, GOs bring about the possibility to make real interaction with the client and achieve sustainability goals together. Producers on the other hand can make long-term PPAs bundled with the energy origin and consider the extra revenue in the investment. The list could go on and the example I gave above on the energy consuming company is just one of many, which demonstrate the power of GOs.

But what about private people? About a year ago, I read an article in the Finnish main newspaper about a Finnish start-up for compensation, which had run into trouble because their operation was considered as charity. By and large, it was claimed that the buyer gets nothing in return of the compensation purchase and therefore the operation is gratuitous. If you ask me, it gives me far greater value to know that the energy I consume is renewable or that my flight emissions have been compensated than buying a new shirt or a battery-operated dancing robot. The latter really didn’t go in the top 10 of birthday presents we’ve received…

The future is electrified and digital and built based on the choices we make. Therefore accurate information about power is, well, truly powerful.