Australia’s Guarantee of Origin Scheme

Priority Feedback

• Product GO Scheme design seeks to prioritise export profits over needs of domestic energy customers & prioritise renewable electricity over renewable gas. The GO Scheme should use the same well-to-gate design for both schemes.
• Product GO Scheme well-to-user design is inconsistent with majority of hydrogen certificate designs internationally. The Product GO design should revert to a wellto-gate model to maintain international competitiveness of Australian hydrogen.
• Product GO design is incompatible with the Safeguard Mechanism Reforms. Scope 1 emissions of consumption should be displayed on certificates. *Note that this solution needs to be paired with amendments to NGERs

The Australian Pipelines and Gas Association (APGA) represents the owners, operators, designers, constructors and service providers of Australia’s pipeline infrastructure, connecting natural and renewable gas production to demand centres in cities and other locations across Australia. Offering a wide range of services to gas users, retailers and producers, APGA members ensure the safe and reliable delivery of 28 per cent of the enduse energy consumed in Australia and are at the forefront of Australia’s renewable gas industry, helping achieve net-zero as quickly and affordably as possible.

APGA welcomes the opportunity to contribute to consultation on Australia’s Guarantee of Origin Scheme (GO Scheme) Policy position paper (the Consultation). APGA considers that the GO Scheme is an important step in developing Australia’s domestic hydrogen industry, and it is therefore critical to get the design of this scheme right for domestic customers.

APGA supports a net zero emission future for Australia by 20501 . Renewable gases represent a real, technically viable approach to lowest-cost energy decarbonisation in Australia. As set out in Gas Vision 20502 , APGA sees renewable gases such as hydrogen and biomethane playing a critical role in decarbonising gas use for both wholesale and retail customers. APGA is the largest industry contributor to the Future Fuels CRC3 , which has over 80 research projects dedicated to leveraging the value of Australia’s gas infrastructure to deliver decarbonised energy to homes, businesses, and industry throughout Australia.

APGA considers the incentivisation of more economically efficient hydrogen production from behind-the-meter renewable electricity as a positive outcome of the GO schemes. However, other features of scheme design risk hampering the scheme’s contribution to least cost decarbonisation. In summary, APGA feedback covers the following topics:

Summary of APGA Feedback

• Certificate design prioritises export outcomes over domestic outcomes;
• Product GO certificate design inconsistent with international schemes ;

Product GO certificate design inconsistent with international schemes

Product GO scheme design has been based on the assertion that a well-to-user model is required to aligned with international trade requirements. However, an IRENA report shows that the majority of hydrogen certificate schemes under development internationally do not consider emissions downstream of hydrogen production.

This makes the current well-to-user design of the Product GO scheme inconsistent with international scheme design trends.

Of the schemes reported in Table 1 and Table 2 of the report (excluding the Australian Scheme), nine of fifteen schemes do not include emissions downstream of hydrogen production. Only five schemes consider emissions downstream of hydrogen production, two of which are solely focused on hydrogen for the purposes of transport rather than international trade. One scheme has not yet defined its boundaries.

Implementing a Product GO Scheme more onerous than the majority developed internationally risks Australian hydrogen exports being less competitive on the international stage. Combining this risk with the risk that the scheme will make renewable hydrogen trade harder for domestic customers, APGA questions the value of maintaining the well-to-user model within Product GO scheme design.

APGA Recommendation 2

• Product GO certificates do not support Safeguard Mechanism Reforms ; and
• Scheme design changes improving impact of Product GO certificates; including
  a. Expanding Product GOs to cover additional renewable gas products;
  b. Applying lessons learned from the Emissions Reduction Fund; and
  c. Ability to integrate with existing gas markets

Certificate design prioritises export outcomes over domestic outcomes

APGA observed a change in focus in this consultation from the Guarantee of Origin scheme, from preferencing export outcomes to putting domestic outcomes equal to export outcomes.

“The GO scheme will help unlock economic opportunities for Australian industry to meet growing domestic and international demand for verified renewable energy and clean products.”

This is important context considering a key inconsistency between proposed Product GO and Renewable Energy GO (REGOs) certificate designs. Specifically, the inconsistency in a well-to-user design being applied to the Product GO scheme and a well-to-gate REGOs design being applied to the REGO scheme.

The choice to implement either a well-to-user or well-to-gate design comes with inherent pros and cons. It is reasonable to expect that each of these pros and cons apply to both the renewable electricity covered by the REGO scheme and products covered by the Product Go scheme. Surprisingly, the consultation paper arrives at inconsistent proposals.

APGA flags that this inconsistency results in the needs of energy exporters and international energy customers being put ahead of domestic consumers of energy, hydrogen, and future products covered by the Product GO scheme. Importantly, this outcome can be avoided by applying well-to-user or well-to-gate models consistently across both the Product Go and REGO schemes, with a preference for applying well-to-gate design across both.

Difference in impacts of well-to-user and well-to-gate scheme designs

The difference between the well-to-user and well-to-gate scheme design can be summarised around three key impacts of each choice:

Flexible certificate trade: the relative ability for certificates to be domestically traded as fluidly as LGCs today.

International trade compatibility: the inclusion of information aligned with international trade requirements.

Influence on emissions reduction: tracking emissions provides downward pressure on
emissions.