Development of a Clean Energy Credit Registry

The Ministry of Energy is seeking public input on the launch of a clean energy credit (CEC) registry, which will track the trade of credits from non-emitting facilities for electricity generated and consumed in Ontario.

A CEC registry in Ontario could help businesses meet their environmental and sustainability goals, support ratepayers by enabling proceeds from CEC sales to flow to the rate base, and help our efforts to further decarbonize by supporting investment in new clean or renewable generation.

Clean energy credits

CECs are instruments derived from the positive environmental attributes (EAs) associated with clean electricity generation projects. CECs are certificates that represent one megawatt-hour (MWh) of clean electricity that has been generated from a non-emitting source, such as solar, wind, bioenergy, hydroelectric and nuclear power. A growing number of companies have set a corporate target of 100 per cent clean electricity generation and consumption. A number of Ontario corporations and individuals already voluntarily purchase CECs to meet their corporate sustainability goals. There is, however, no official centralized registry that tracks and enables the purchase of CECs for electricity generated and consumed in Ontario. CECs and voluntary registries exist in other competing North American jurisdictions.

Developing or participating in a registry for the voluntary purchase of CECs generated and traded in Ontario would allow consumers to demonstrate compliance with their own voluntary clean and/or renewable electricity targets by enabling transparency around the creation, trading, and retirement of CECs generated in Ontario.

Ontario context

Over time, Ontario has actively invested in our electricity supply. The backbone of our system is nuclear generation accounting for 55 percent of the province’s supply mix in 2021 . We also have a considerable amount of renewable generation in Ontario with 23 percent of our total generation coming from hydro facilities (both large dams and run of the river assets) and 12 percent from non-hydro renewable energy including wind (9 percent), solar power (2.5 percent) and bio-energy (0.5 percent).

As a result, we have a predominantly clean electricity supply with over 90 percent of the electricity generated in Ontario being emissions free in 2021. The new registry would help Ontario highlight its clean electricity grid, for those wishing to invest in the province.

On January 26, 2022, the Minister of Energy directed the Independent Electricity System Operator (IESO) to research and report back on the design of a provincial CEC registry. This posting is a further opportunity to build on the outreach and engagement efforts carried out by the IESO.

Per the minister’s letter to the IESO, the registry would initially be designed to:

• Be scoped to Ontario – that is, CECs must be generated and consumed in Ontario;
• Allow for voluntary CEC purchases – no person or entity would be required to purchase CECs;
• Emphasize customer choice – offer CECs from all non-emitting fuel sources from facilities in different areas of the province;
• Monetize investments made in Ontario – CEC offerings should include those from existing non-emitting generation; and
• Be future-proof – built to offer flexibility and the potential for future expansion to other products or markets.

Furthermore, the minister’s letter indicated that the IESO should consider how to enable the launch of a registry by January 2023.

Basic features of a registry

A CEC registry could be a web-based tool accessible from standard internet browsers that allows for the recognition, display of certification, tracking – including the tracking of transfers and retirements of CECs. The registry itself is not a market, as financial arrangements are made separately between the seller and purchaser. The registry can act as a tracking system which would allow access for all Ontario-based non-fossil fuel generation facilities to enroll and certify their generation, track ownership of the credit, and retire the CEC so that it can not be claimed by any other party. The registry could require:

• Information about each CEC including a unique identifying tag, the generating facility name and location, date of generation and fuel source, third-party certifications (if applicable), etc.
• Methods for tracking each CEC to verify the creation date, source, owner traceability, and status (retired, active, expired).
• Documented operating procedures for CEC creation, certification, tracking, transfer, and retirement; user registration and account structure; and data security, confidentiality, and dispute resolution.

Future iterations of a registry for Ontario-generated credits could expand beyond these features to potentially include other products or more advanced tracking features.

Proposal

To support specific design elements, and overall administration of the registry, legislative and regulatory changes are anticipated to be required. The ministry is contemplating the following changes to legislative and regulatory powers (note that the following does not represent an exhaustive listing of the various elements of the proposal and other items may be added and these items may be amended as the Government deems necessary):

• Provide authority to the IESO to establish or designate a CEC registry for Ontario, and specify the administrative requirements for a CEC registry for use in Ontario.
• Authorize the IESO to act as a market participant, and to make available the CECs it holds.
• Allow the minister to set rules and requirements for the operation of, or participation in, the registry.
• Allow the minister to direct how the revenues from CECs created by regulated assets owned by Ontario Power Generation Inc. or CECs arising from IESO's procurement contracts should be used, including directly benefiting ratepayers and supporting the future development of new clean energy in the province.
• Ensure the retirement of CECs associated with generation facilities in Ontario is allocated to electricity loads (electricity consumed by entities) within the province of Ontario.
• Add reporting requirements for the sale and retirement of CECs to ensure transparency and accountability.

The registry would be enabled in a manner that preserves future flexibility for interconnection with other markets, treatment of import/export of electricity, and treatment of new generating facilities.

To help inform any required amendments, the ministry would like to hear from Ontarians, businesses interested in acquiring CECs to achieve their environmental and sustainability goals, as well as Indigenous communities, industry associations, power generators, electricity retailers, utilities, municipalities and consumers.