This consultation was open from:
August 2, 2022
to September 16, 2022
We have introduced legislative and regulatory changes to enable the IESO to launch a clean energy credit (CEC) registry to track the transfer and retirement of voluntarily purchased CECs generated from Ontario’s clean electricity supply. The CEC registry will provide businesses with a new tool to meet their corporate sustainability goals.
We have made amendments to the Electricity Act, 1998, and consequential amendments to the Ontario Energy Board Act, 1998, as well as introduced new regulations to enable the launch of a voluntary clean energy credit (CEC) registry to boost Ontario’s international competitiveness and attract jobs.
CECs represent one megawatt-hour (MWh) of clean electricity generation. Clean electricity generation means the electricity was created from a non-fossil fuel source, such as solar, wind, bioenergy, hydroelectric and nuclear power. The CEC registry will provide businesses with a new tool to meet their corporate sustainability goals by purchasing clean energy (nuclear, wind, solar, hydro, bioenergy) credits generated in Ontario. Companies would be able to procure CECs from their preferred generation source. Proceeds from the sale of Clean Energy Credits by the Independent Electricity System Operator (IESO) and Ontario Power Generation (OPG) will be directed to the Future Clean Electricity Fund, once established, to support future clean energy projects.
Access to 100 per cent renewable electricity is increasingly a key priority for companies investing in large-scale manufacturing projects, particularly those for electric vehicles and the battery supply chain that serves it. This initiative would also add to the growing list of factors that make Ontario a top destination for manufacturing investment, such as the province’s well-trained workforce, tax credits and a world-class research and development ecosystem all while enhancing our energy advantage.
We have made legislative amendments that:
- Provide authority to the Independent Electricity System Operator (IESO) to establish or designate a CEC registry for Ontario and specify the administrative requirements.
- Mandate that all entities that voluntarily sell CECs use the registry and abide by the registry rules.
- Authorize IESO to set rules and requirements for the operation of, or participation in, the registry.
- Require IESO and Ontario Power Generation (OPG) to act as registry participants, and to require them to make available certain CECs they hold.
- Allow the minister or Government to direct by regulation the flow of revenues from CEC sales by the IESO and OPG.
- Ensure the retirement of CECs is allocated to electricity consumed within Ontario, with consideration for exemptions to preserve existing contracts (including exports) and allow time for contracts to transition to the requirements of the CEC registry.
- Add requirements for IESO to report on the sale and retirement of CECs to ensure transparency and accountability and for annual reporting on the cleanliness of Ontario’s grid.
Establishing a Registry
We have authorized the Independent Electricity System Operator (IESO) to designate an existing registry to track the creation, transfer and retirement of all CECs produced and consumed in Ontario.
The legislative changes to enable the establishment of the CEC registry were proclaimed on March 15, 2023.
A CEC will typically be created and tracked through the registry as follows:
- Generator: The generator registers their organization and individual clean energy facilities on the registry.
- Customer: The customer registers and can use the registry to search for generators whose facilities meet their needs (e.g., renewable sources), or separately through a broker.
- Agreement: Outside of the registry, the generator and customer reach a bi-lateral agreement on the financial terms of the CEC purchase.
- Transfer and Retirement: The generator registers the CECs on the registry and transfers them to the purchasing customer, who accepts and retires the CECs on the registry.
The system assigns each CEC a unique tag upon the clean energy generation credit being added to the registry. Unique tags ensure that the consumer is accepting and retiring the purchased CECs only once, which prevents multiple entities making positive environmental claims for the same attributes (a practice known as “double counting”).
Allowing generators to sell CECs
Any generators engaging in voluntary CEC sales will be required to use the registry and abide by the rules set by IESO. CEC ownership transfers must be recorded on the registry.
CECs may be created and sold for the following generation source types:
- Biofuel, biogas and biomass
Generators must be connected to transmission or distribution systems.
Regulations made also:
- Exempt existing contracts from legislative changes that would otherwise negatively impact contracts in place.
- Postpone some requirements for existing contracts to provide time for them to transition to the CEC registry.
Requiring IESO and OPG to sell CECs
We made regulatory changes which authorize IESO and OPG to act as registry participants, and to require them to make available certain CECs they hold as needed to meet demand. The IESO is expected to make at least 2.5 terawatt-hours (TWh) of IESO-held environmental attributes (EAs) available for transfer in 2023
In addition to the legislative and regulatory changes, the Minister of Energy has:
- Asked OPG to compile a report on OPG’s historical CEC sales prior to the launch of the CEC registry.
- Asked IESO and OPG to undertake an analysis of CEC market demand on a regular basis.
Analysis of Regulatory Impact
- The purchase of CECs is voluntary. Implementing a CEC registry will be at no cost for individuals or entities that do not participate.
- Changes to the Electricity Act, 1998, will require any entity that purchases or sells CECs from eligible Ontario-based generation to create an account and document the CEC transfer and retirement. This means that both purchasers and sellers will have to pay for an annual account subscription on the designated registry to comply with the legislative changes.
- The annual subscription cost to participate on the registry must be paid by CEC sellers and purchasers, along with any volumetric and transaction fees. Volumetric and transaction costs are per-CEC fees associated with certain actions taken on the registry (e.g., to post a CEC or retire a CEC). These fees represent a very small fraction of the overall transaction.
- These costs will depend on the registry selected and the participant type (seller or purchaser) and will be communicated by the IESO in the registry rules.
- The costs to those who voluntarily participate in the CEC registry are anticipated to be minor when compared to the potential economic investments and opportunities that implementing a CEC registry offers.
Effects of consultation
We received 32 unique submissions from a variety of stakeholders, including generators, industry associations, municipalities, environmental groups, consultants, individuals and local distribution companies.
Submissions were generally supportive or neutral toward the proposal with some respondents offering recommendations on registry design and implementation. There were some mixed and negative responses, generally related to concerns about the need to advance Ontario’s environmental goals and bring on new clean energy supply more quickly. Submission feedback included the following key themes:
Many submissions emphasized the importance of transparent governance of CEC sales and retirements.
We passed legislation that requires all CECs generated in Ontario to be transferred via the CEC registry and retired against electricity consumed in Ontario (while reserving authority to exclude existing contracts).
The legislation also allows IESO to contract with a third-party broker to handle CEC sales from IESO-held environmental attributes to allow IESO to focus on its role as registry administrator.
Supporting Clean Supply
Multiple submissions recommended that revenue from the sale of CECs is dedicated to development of new additional clean generation.
In the lead up to the launch of the CEC Registry, the Ministry is finalizing plans for how net revenues generated through the sale of IESO-held and Ontario Power Generation-held CECs would directly benefit Ontario ratepayers and further support new clean energy generation.
Fuel Sources/Clean Energy Tools
Multiple submissions recommended allowing various generation sources and other voluntary clean energy tools/services.
Eligible generation resources will include nuclear, solar, wind, hydroelectric, biofuel, biogas and biomass. Release of CECs will be subject to market demand and CEC activity will be reported. We note that some of the recommended resources are beyond the scope of electricity generation.
Ontario’s Supply Mix Disclosure
Several submissions emphasized the importance of being able to understand how much of Ontario’s clean energy generation will be attributed to CEC purchase and how much will remain thereafter.
We passed legislation that adds requirements for IESO to report on the sale and retirement of CECs to ensure transparency and for annual reporting on the cleanliness of Ontario’s grid.
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Get in touch with the office listed below to find out if materials are available.
77 Grenville St., 5th floor
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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.
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.
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.
View materials in person
Get in touch with the office listed below to find out if materials are available.