On 23 May 2024, the Commission adopted an implementing regulation under the 2024 Net-Zero Industry Act, specifying non-price criteria for renewable energy auctions. This includes responsible business conduct, cybersecurity risk management, sustainability and resilience.

These factors will need to be applied by Member States and EEA countries from 30 December 2025 onwards to at least 30 % of the annual volume of renewable energy capacity they put up for auction, or at least 6 GW, for the following technologies:

solar technologies, including PV, solar thermal electric and solar thermal technologies

onshore wind and offshore renewable technologies

battery and energy storage technologies

heat pumps and geothermal energy technologies

hydrogen technologies, including electrolysers and fuel cells

sustainable biogas and biomethane technologies

CCS technologies

electricity grid technologies, including electric charging technologies for transport and technologies to digitalise the grid

nuclear fission energy technologies, including nuclear fuel cycle technologies

sustainable alternative fuels technologies, etc.

The full list can be consulted here.

Auction bids will be ranked based on prices and these criteria to give preference to EU-made products.

Countries must include pre-qualification criteria or award criteria to assess the auction’s sustainability contribution. The carbon footprint of renewable energy technologies is one of the relevant criteria that EEA countries can choose to introduce. Circular economy contribution, biodiversity impact, energy efficiency, efficient water use, pollution, innovation, and energy system integration are other criteria.

Carbon footprint should be communicated using life-cycle assessment, where methodology is indicated (applies to photovoltaic electricity and rechargeable batteries). If not, GHG emissions of electricity/energy used should be used. The Commission is expected to harmonise the methods for assessing life cycle carbon footprints to improve the comparability of results, as part of the Clean Industrial Deal.

Market impact

According to common practices in life-cycle assessment and Veyt discussions with an expert, GOs are not commonly used for LCA, unless a corporate insists on using them. Instead, for Scope 2 GHG management, emissions from electricity use are based on aggregated data from LCI datasets (e.g. ecoinvent, Sphera) using the location-based method by relying on national-grid average emission factors.

The Commission has its own product- and organisation-specific life cycle methodology – the Environmental Footprint methods (EF) – but these are not mentioned in the text (in contrast to the proposed text of the Green Claims Directive).

The EF method is a life-cycle assessment (LCA)methodology recommended by the European Commission to quantify the environmental impacts of goods, services, and organisations over their lifecycle. For electricity use, precision-modelled consumption should be reported, with EECS GOs fulfilling this criterion, as there is a 100 % tracking system in place. Under the EF, for reporting electricity mix, preference is given first to GOs, then to supplier-specific total electricity mix, and then to the country-specific residual grid mix, consumption mix, and lastly to the average EU residual grid mix, consumption mix (EU+EFTA).

The EF require using market-based reporting for electricity use, these companies could turn to using the residual mix instead; however, that could limit the potential to make environmental claims due to relatively “dirty” residual mixes in some domains. This, in turn, could direct such companies to seek out GOs/PPAs.

Under EF methods, GOs from all energy sources can be used. However, those with low life-cycle emissions, such as hydro, wind and nuclear, are favourably positioned. Despite good indicators from the emissions perspective and cost efficiency (nuclear GOs traded at 0.13 EUR/MWh compared to the price of future RES-GOs under 2.6 EUR/MWh in June 2024), more widespread use of atomic certificates under the EF could be limited.

This is due to the requirement to disclose relevant environmental issues related to the product supply chain in the EF impact categories, which for nuclear energy relates to radioactive waste under “ionising radiation, human health”. For solar, which has among the highest life-cycle emissions of the low-carbon alternatives, the impact category is “resource use, minerals and metals” related to the use of rare-earth minerals to produce solar panels. In theory, this leaves hydro and wind GOs as preferable choices for Scope 2 management under EF.

The regulation could drive GO uptake by renewable technologies producers participating in auctions, if carbon footprint criteria are requested by the EEA countries’ authorities.