Going forward, we expect that the clean energy transition will focus on carbon markets, offsets and certification as a means of providing flexibility in reaching net zero as well as certainty that products are actually green. Carbon markets and offsets are set to play a key role in satiating demand to reach net zero, given the ever tighter and more urgent deadlines as well as the fact that a lot of necessary technology is still in the research and development stage. Certification is the flipside of the same coin and should (ideally) validate the ‘green-ness’ of a product: we expect certification schemes will proliferate and, in time, become subject to greater scrutiny as some will invariably miss the mark.
- Carbon markets and offsets: The importance of carbon markets and emissions offsets is set to increase in 2022 as governments, companies and communities seek to make good on their net zero targets. Australia is closing in on its first national carbon market following a tender this year by the Clean Energy Regulator. Meanwhile, at COP26 the long-awaited rules for an international carbon market were finally agreed upon, including a minimum 2% cancellation of each credit traded on that market (thereby ensuring an overall drop in global emissions). In addition, the role of offsets will be scrutinised, with emphasis likely shifting from avoidance units (created by renewable energy projects, for instance) and biological storage units (ie trees) to sequestration units (the removal of greenhouse gas emissions from the atmosphere).
- Certification: Following on from carbon markets, offsets and our coverage earlier this year, we expect certification and guarantee of origin schemes to become a major aspect of the clean energy and decarbonisation landscape for 2022. Such schemes which seek to certify the purported ‘clean’ or ‘green’ characteristics of a given product, service, process or even an entire firm both satisfy and create demand in the fledgling renewable energy markets. Green certification is a highly marketable product attribute. Further, as domestic and international regulatory pressures see the introduction of carbon-intensive prohibitions, such as the EU carbon border tax, green certification has the potential to become an imperative compliance and risk-avoidance measure. 2021 saw the announcement of the Smart Energy Council’s Zero Carbon Certification and a consultation draft of the Commonwealth government’s H2 Guarantee of Origin Scheme which has been in consideration since early August. There are competing interests inherent in such schemes, and we expect the discourse to continue into 2022 where we hopefully see the substantial and meaningful implementation of one such scheme.
Interested in more on carbon markets and offsets? See: Carbon markets in Australia and overseas 2021.
Want more on green energy? See Hy Hopes: Why the Proposed H2GO certification scheme must embrace green hydrogen.