Please see our attached…

Please see our attached document for full sourcing of our comments.

The Atmospheric Fund (TAF) appreciates the opportunity to provide feedback on the matter of
developing a Clean Energy Credit (CEC) registry. TAF is a regional climate agency that invests
in low-carbon solutions in the Greater Toronto and Hamilton Area.

A regulated clean energy credit market has potential to support decarbonization by channeling
investment into clean energy infrastructure. Experience in many other jurisdictions shows that
there is a significant demand for clean energy, which supports the expansion of clean energy
supply. For example, Alberta has added more than two gigawatts of clean generation to the grid
through corporate Power Purchase Agreements (PPAs) in the last two years alone. Ontario can
and should take advantage of the growing demand for clean energy to help finance the
transition to a net zero electricity system. In principle, TAF supports the creation of a
regulated CEC system in Ontario.

However, we are concerned with the proposal to allow the sale of CECs based on
existing generation assets under contract. The foundational principle of credit or offset
markets is additionality – that the sale of a credit should result in incremental carbon reduction
and/or clean energy supply that would not have occurred without the revenue from sale of the
credit. CECs sold based on existing generation assets under contract lack additionality. The
IESO itself has advised that such credits carry “no additionality” and amount to little more than
government-sanctioned “greenwashing”. Furthermore, the availability of a large volume of
CECs based on existing assets, effectively endorsed as legitimate by the Province of Ontario,
risks undermining the market for CECs and/or PPAs for new clean energy supply. Therefore,
the inclusion of this type of CEC product could actually reduce investment in clean
energy and undermine the transition to a net zero electricity system.
If existing generation assets under contract are allowed to generate CECs, we
recommend those credits be retired on behalf of customers (option 1a as outlined by the
IESO). Alternatively, if such CECs are sold, all revenues should be required to be reinvested in
new clean energy infrastructure. Using the revenues to invest in new clean energy supply would
still achieve the ministry’s goal of benefiting ratepayers.

We recommend the province design the proposed CEC system to maximize private
investment in new clean energy supply. There are several ways to achieve this, as outlined
by the IESO. Based on the experience of other jurisdictions and the responses to the IESO
Customer Preference Survey, we believe that CECs bundled with PPAs is the most promising
option (option 3a as outlined by the IESO). PPAs are a proven mechanism for channelling
private investment into additional clean energy supply and are the preferred mechanism for
large companies around the world to achieve clean energy commitments. However, creating a
successful market for CECs based on PPAs will require more than the creation of the proposed
CEC Registry. Regulatory amendment is needed to allow clean energy purchased through
PPAs to be subject to reduced global adjustment charges.

TAF supports the creation of a CEC registry to mobilize private investment in clean
energy. To ensure impact and credibility, we recommend that the government make
additionality a foundational principle for the proposed CEC system. A CEC market flooded with
credits based on existing assets with no additionality will undermine investment in clean energy
and encourage “greenwashing”. In contrast, a robust and transparent CEC market based on
new clean energy generation has the potential to mobilize significant private investment in clean
infrastructure, accelerate the transition to a net-zero grid, and support long-term energy
affordability for all Ontarians.

We strongly urge the province to design the proposed Clean Energy Credit market to
prioritize additionality and mobilize investment in a clean energy future.