Inflation in GO market

After decades of discretion, the inflation is back in all markets across the globe. It is visible nowadays at every level of supply chains and often painful for retailers and consumers. It is very regrettable to assist to insolvencies of energy suppliers who did not have the time to hedge themselves when surges in prices practically gave them no time to breathe. On the certificates side, the demand also pushed prices up for carbon compliant and voluntary units. Its inflation was fuelled by political motivations as well as the general increase of interest in corporate sustainability.

Guarantees of Origin followed the mood and doubled in price during the second half of 2021 then stabilised at the end of the year. The correlation with the general fuel complex is arguable. We would not be so sure to say that there was a lack of GOs and EACs (Energy Attributes Certificates) in markets. National auctions kept supplying in large amounts the demanders. While energy commodities were panicking about their availability, their traders actually diverted their focus from the EAC markets to the energy ones, logically. The trading of GOs did not really suffer big changes in activity but sometimes felt left on the side-line.

Mid-prices for Any AIB Renewable GOs 2021-2022-2023 throughout calendar year 2021

The three curves show that prices kept going up in the forward maturities, leaving the current year under less pressure, despite high tension in the whole energy complex. We could see this as a sign that there are still enough GOs available to track claimed origin in 2021. The increase of the spread forward anticipates a risk of change of this situation. Subscribe here to receive every Friday a settlement for GOs and keep track of the price throughout 2022.