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Ontario took its first step toward establishing a voluntary Clean Energy Credit (CEC) registry last month.
On January 26th, provincial energy minister Todd Smith sent Ontario’s Independent Energy System Operator (IESO) a letter requesting an assessment report on CEC registry options, anticipated benefits, and projected costs.
CECs are a broader form of Renewable Energy Credits (RECs), in that CECs can include non-renewable (but nonetheless) low-carbon energy sources; namely nuclear energy, which supplies a large portion of Ontario’s grid.
RECs are commonplace in the US and play a significant role in state Renewable Portfolio Standard laws requiring utility companies to buy certain amounts of green energy each year.
Although Ontario’s grid is exceedingly clean by North American standards, deriving 94% of its electricity from non-emitting sources like wind, hydro, and nuclear, a CEC registry could help businesses meet quantifiable emission reduction goals and boost ESG credentials by allowing certified clean energy purchases from the grid.
CEC purchases would not in any real sense ensure that businesses only received clean energy from low-carbon sources, but as long as CEC revenues are used to support clean energy use in Ontario, the system could be helpful for businesses under increasing pressure to decarbonize their operations, at least in terms of carbon accounting.
In the minister’s letter, he asked that the IESO issue its report by July and consider:
how “proceeds from CEC sales” could “flow to ratepayers, recognizing that ratepayers have borne the significant costs of previous efforts to decarbonize Ontario’s electricity system”;
an “initial design…scoped to enable the trading of credits within Ontario, with the potential to support cross-border trading in a future phase”;
“market demand…and design products to satisfy that demand”;
how the registry could “offer flexibility and the potential for future expansion to other products or markets, and…incentivize future investment in new clean generation, when that power is needed”; and
“the impact of the registry on other environmental goals to avoid unintended consequence [sic] of double counting efforts to meet those goals, for example with Ontario’s Emissions Performance Standards (EPS) program requirements.”
The last point shows the ministry considering how a CEC registry might interact with Ontario’s recently-introduced Emissions Performance Standards (EPS) carbon pricing program for large industrial polluters, but the letter does not elaborate further on this point.
The letter indicates the ministry intends to launch the registry in January 2023.