Green or greenwash? Why we need clean energy certification

Above: Clean energy certificates would cover the entire value chain of green fuels

Growing momentum behind the shift to net zero is putting a social and financial premium on clean sustainable energy, such as that coming from renewables. This premium applies not only to electricity but increasingly to downstream products derived from so-called ‘power-to-X’, for example green hydrogen, but also products and services coming from process sectors, the chemicals industry and even data centres.

The growing availability of clean energy coincides with broad awareness among consumers of both their environmental footprint and their desire to effect change. For companies, being green therefore also has significant brand value. Companies are increasingly asking for green fuel to meet both regulatory demands and their own CSR (corporate social responsibility) and ESG (environment, social and governance) goals to reduce emissions. Their customers too have higher expectations and are prepared to stump up the cash to ensure a lower carbon footprint.

These broad trends mean there is a growing expectation that any company hoping to retain its licence to operate will need to establish a rock-solid green pathway for its products and services over the coming years.

However, it’s often extremely difficult to tell if a product is actually green or just greenwash. For example, the bulk of hydrogen produced worldwide today does not come from the electrolysis of water powered by renewable energy. Instead, it is steam-reformed natural gas. This is essentially a fossil fuel, and it obviously has an associated carbon footprint. For companies buying in clean energy, whether wind, solar, or new energy carriers such as hydrogen or ammonia, how can they and their customers be certain that the energy they are paying premium prices for really is as clean as they would like to believe.

Without some mechanism to establish the origins of their products, companies looking to distinguish themselves from their competitors and establish their green credentials potentially risk paying higher prices for zero benefit or are even at risk being slapped with a greenwashing label that can inflict serious brand damage.

The solution is an end-to-end clean energy certification scheme that covers the entire energy supply chain.

Plotting a course for clean energy

Clean energy certification (CEC) is an instrument that bundles electricity, a fuel or other energy vector or even a product, with its production method to guarantee that it originates from a sustainable source.

The CEC system developed by Siemens Energy and its partners, TU¨V SU¨D and dena, uses secure blockchain technology. The nature of blockchain makes it ideal as a system that is all but impossible to modify without detection. Using Blockchain – the technical term for which is Distributed Ledger Technology (DLT) – it records all the transactions as it moves through the value chain from production right through to use.

For CEC, blockchain means that the fuel and its certificate cannot be separated. It is therefore impossible to sell the product to one customer and the certificate to another.

Siemens Energy – already working with certification body TU¨V SU¨D and the German energy agency dena and in talks with other certification bodies and scheme holders – established a network of blockchain partnerships to connect the physical assets and commodities to digital infrastructure in a global, efficient, transparent, and tamper-proof way. All data is encrypted and is not shared with any of the other CEC participants. Under the CEC scheme, products are automatically tagged with a certificate that records the origin and stays with the product throughout its potentially complex journey, using smart contracts. Blockchain technology makes it not only easy to track a product but provides detailed insights into its attributes as it travels through the market, across borders and between sectors, if necessary.

The certificate shows the type of product and its carbon footprint as well as the location of the production asset and its time of production. These characteristics mean that CECs are valid around the world and throughout the power-to-X value chain.

The benefits of blockchain and CEC

An internationally accepted certification standard for low-carbon products meets a clear market demand and offers a number of other benefits as well. In a world where production and consumption of energy may be geographically separated across markets, the validity of carbon footprints is key. For example, the most efficient renewable power production may take place in resource-rich locations while demand centres can be many miles away or even in a different country. The growing use of energy vectors like hydrogen, ammonia or so-called drop-in e-fuels like methanol produced from hydrogen means a global green energy commodity market – clean power-to-X for example – is possible. However, that requires a reliable, 100% transparent, and legally compliant system that is applicable across borders and between sectors. Such a system must mirror that of conventional fuels and be timely, effective and offer low investment and operational costs. These are all qualities that are met by a blockchain-pegged certification scheme.

Enabling cross-sector, clean energy trading is also important for meeting future governmental clean energy targets and related regulations.

For example, in Europe there is the Fit for 55 package, which was introduced by the European Commission in July 2021. Fit for 55 aims to align EU climate and energy legislation with its climate-neutral-by-2050 objective and plans to reduce net greenhouse gas emissions by at least 55% by 2030. Similarly, the US Infrastructure Investment and Jobs Act passed in 2021 aims to create a net-zero economy by 2050 while in 2022 the Australian government released its Long-Term Emissions Reduction Plan, designed to achieve net zero by 2050. Such schemes will depend on flexible and global clean energy commodity markets, which in turn require verifiable certification. More than 1.3 billion vehicles with internal combustion engines are registered worldwide and e-fuels seem to be the only way forward for them to help achieve climate targets. E-fuels based on green hydrogen and CO2 will make an enormous contribution to decarbonising the transport sector and are indispensable for the shipping, aviation, and heavy-duty transport industries.

Renewable e-fuels: Patagonian pioneer

In the southern tip of South America at Punta Arenas in the Magallanes Region of Chile, is the world’s first commercial renewable-energy-based e-fuels facility. Haru Oni, on the Tehuel Aike Estate, uses wind-powered electrolysis to split water. It then combines hydrogen and CO2 of biogenic origin to produce liquid synfuels. It is also one of the first uses of the Siemens Energy CEC ecosystem.

In this project a 3.4 MW wind turbine is powering a 1.2 MW electrolyser to produce 350 tonnes of eMethanol and 130 000 litres of eGasoline annually. Alongside the carbon-neutral methanol (eMethanol) and petroleum (eGasoline) the site is also expected to produce green liquefied natural gas (eLNG). According to HIF Global, owner and lead developer of the Haru Oni project, production capacity will increase up to 550 million litres over the coming years, with the planned expansion of the facility. Initially, co-founder Porsche will be the fuel off-taker for its Porsche Experience Centers and the Porsche Mobil 1 Super Cup. Construction began in September 2021 and the first e-fuel delivery took place earlier this year. Full commercial operation is anticipated as MPS went to press.

Siemens Energy was responsible for the plant design, technology integration, and is supplying its electrolyser technology. The wind turbine is from Siemens Gamesa. Other participants in the project include ENEL Green Power, a partner in the wind power generation and green hydrogen production, and ENAP, the Chilean state-owned energy company, which is providing infrastructure and logistics support. Empresas Gasco provided research and development on syngas while ExxonMobil supplied the methanol-to-gasoline (MtG) plant and Johnson Matthey the methanol synthesis technology.

These drop-in e-fuels allow current fuels infrastructure and even internal combustion engines to use green energy without any modification. And, although burning e-fuels does still produce CO2, its production captures the same CO2, effectively creating a sustainable CO2 cycle not dissimilar to the use of sustainable biomass. As a liquid energy carrier, e-fuels are said to emit about 90% less CO2 than a fossil fuel equivalent. Crucially though, the clean energy certification system proves the green origin of the e-fuels, in this case as used in the Porsche motorsport fleet.

Commenting on the project, Ce´sar Norton, president, and CEO of HIF Global said, “To produce e-fuels with the power of the Patagonian wind...is a concrete solution, here and now, to the main challenge of humanity.”

The world’s first commercial, industrial-scale hydrogen plant used for producing synthetic fuels, this remote location demonstrates the power of using a world-class renewable energy resource to make a transportable and provably green fuel.

A similar scheme, this time in Germany, is using Siemens Energy CEC for hydrogen produced at Nobian’s chlor-alkali electrolysis plant in Bitterfeld. In a project with Nobian, envia THERM GmbH, and Siemens Energy, this pilot has already proven the certification solution as a verifiable route to market for green hydrogen in the chemical sector.

Clean energy certification: the key to clean energy

Sun, wind, and water are key to our clean energy transition, but harnessing those resources wherever they are available is just as important to achieving that transition as effectively and cost efficiently as possible. Clean energy certification is vital to ensure market confidence and the building of a solid market for resource-based commodities such as e-fuels. The Haru Oni
and Bitterfeld projects are pioneering not just clean energy technologies but the clean energy markets that will underpin our long-term clean energy ambitions.

Author: Petra Michalke, Siemens Energy