Building trust with Clean Energy Certificates

There is an ancient proverb in the Arab world: “Trust in God, but tie your camel.” What is true in everyday life also goes for business. For almost everything we buy, sell, and consume, we have stringent standards, checks, and certifications. But such verification is still largely lacking for the green energy that is supposed to power the entire EU by the year 2050.

How to tell whether hydrogen has been produced from coal, by wind farms, or by hydropower stations? How to compare green fuels from different countries? And how can end customers find out whether they are buying “green” or “grey” energy? The Clean Energy Certification system now being launched by Siemens Energy provides the answers.

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With the help of distributed ledger technology (DLT), and by connecting the physical assets to the blockchain network, cross-border and cross-sector certificates will be issued in a goverment-approved way. Siemens Energy and its partners want to maintain and raise standards for green energy certification. Future energy applications and products will be tagged with a certificate, which will identify the product’s energy origin all along its value chain. At any time in the process, suppliers, partners, and customers can find detailed information about the production process. The system will be open and will operate across sectors and borders.

The potential uses are manifold. Some of the most promising Power-to-X applications are e-fuels: Energy from renewable sources is first used to produce green hydrogen, which can later be processed further to make green jet fuel or other products, especially in the mobility sector. These technologies are on the verge of being rolled out more widely, even as Siemens Energy sets the ball rolling for a universal certification system.

The time is right: Not only have the EU members finally agreed to cut greenhouse emissions by no less than 55 percent by 2030 and reach full carbon neutrality by 2050, but this transition is also being accelerated to unprecedented speed by technological innovation. Hydropower, wind power, and solar energy will play an ever-larger role in the years to come. New technologies such as Power-to-X applications will help to utilize and store power from renewables in a sustainable way.

“The supply of energy and its use in manufacturing products are usually invisible to us,” says Monika Sturm, Head of Incubation and Strategy at Digital Solutions Siemens Energy. “This is why we want to give it a tag indicating its sustainability.” She is convinced that the energy sector will soon follow the example of the food industry by allowing customers to tell immediately whether they are dealing with a green product or not.

According to Sturm, the new system has three major advantages: First of all, the certified products and applications will be recognized as fulfilling all legal requirements and regulations at the national and European levels. With the new system, it will be easier than ever to prove full legal compliance.

Secondly, end customers will be provided with information in a way that combines maximum transparency with an easily comprehensible classification system, e.g., by means of a color code. This will also benefit producers and distributors, since trustworthy and comprehensive guarantees of product origin will provide a competitive advantage, with customers preferring “green” (and innovative) over “grey” (and outdated) products.

Last but not least, the EU will encourage the green transition by offering financial reductions and rebates for certified green energy applications. In this way, the EU aims to shield its domestic market from competitive disadvantages vis-à-vis other regions, which might undermine the EU’s high standards (“carbon leakage”). All sustainable producers, both within and outside EU, will be eligible for financial benefits granted by the EU such as customs reductions – a win-win situation for legislators (who set the standards) and green companies.

Much like the blockchain technology underpinning crypto-currencies such as Bitcoin, the new certification mechanism will save all relevant indicators, such as CO₂ emissions, asset types, localization, and timecodes, in a token. This token – or certificate – is saved in a decentralized platform and attached directly to the sold product or application. The number of such certificates corresponds exactly to the number of products currently on the market. “Greenwashing by means of double-counting of saved CO₂ will not be possible,” says Sturm.

The ability to track these certificates from beginning to end, using blockchains, ensures a maximum of safety, transparency, and trust. “Everybody gets to see the same information. If one party should try to manipulate or greenwash the figures, everyone else would notice,” says Sturm. This is especially important in cross-border trade, where the European Commission aims to prevent the risk of carbon leakage via outsourcing to countries with lower sustainability standards.

Currently, the new certification system is being used in several pilot projects. One of these involves extracting and writing real-time data from a wind turbine to a decentralized platform system. The challenges are manifold, since the certification system will operate at the intersection of policy, science, economics, and legal compliance. However, progress is substantial, and new insights are generated on a daily basis. The rollout of the new system is scheduled for as early as fall of 2022.

The EU is adopting a leadership role regarding the certification of green technologies, but sustainable energy sources are also being rapidly adopted in numerous other regions of the world. In the Middle East, for example, states that have in the past relied on fossil fuels for their own power supply and as an export commodity are now diversifying their energy systems to make better use of abundant solar power. The government of Australia is also seeking to make more use of low-emissions technologies and hopes to create 13,000 jobs in the construction of renewable energy infrastructure, as well as 16,000 jobs in the clean hydrogen business by 2050. Here, too, investors will require proof that the solutions employed are truly sustainable.

Since the new certification system has been entirely developed from scratch, Siemens Energy cooperates closely with technical certification associations about matters practical and technological. Other partners, such as consulting firms, provide important legal and political input for the actual implementation. “We aim to develop nothing less than the new industry standard,” says Sturm. Judging by the effort and scope of this project, it will soon build trust throughout the energy sector with an instrument that combines transparency and verifiability.

Is my energy really green? The case for certification.

Certificate of sustainability

Transparent and trusted

Distributed information storage

New industry standard for certification

Is my energy really green? The case for certification.

Certificate of sustainability

Transparent and trusted

Distributed information storage

New industry standard for certification

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