On August 2, 2022, Ontario's Ministry of Energy released its proposal for a clean energy credit registry (the "Registry") for public comment on the Environmental Registry of Ontario (ERO). The Registry is proposed to allow the province to track the trade of clean energy credits (CECs) from non-emitting facilities for electricity generated and consumed in Ontario. Public consultation on this proposal is scheduled to close on September 16, 2022, and the Registry is scheduled to launch in January 2023.
CECs are certificates that represent one megawatt-hour of clean electricity that has been generated from an energy source that does not emit carbon dioxide, including wind, solar, hydro, bioenergy, and nuclear sources. Increasingly, businesses are establishing environmental, social, and governance (ESG) goals, which include a commitment to exclusively use and/or generate clean electricity in their operations. CECs can support these goals by allowing the business to demonstrate it is meeting those targets.
The province is proposing the Registry to recognize, display, and track CECs. The ERO posting explains that the Registry is not a market for CECs; transactions are to remain as private financial arrangements. Rather, the Registry is proposed to be a publicly accessible tracking system to determine ownership of CECs, the retirement of CECs, the fuel source, and date of registration, among other things. As a tracking system, the creation of the Registry aims to facilitate an accounting of all CECs while ensuring that credits are not double counted.
Design of the Registry
In January 2022, the Ministry of Energy requested a report from the Independent Electricity System Operator (IESO) by July 4, 2022 [to support the creation of a CEC market based on the following principles:
- Scoped to Ontario The Registry would account for CECs for electricity generated and consumed in Ontario. In the future, the Registry may expand to support inter-provincial and cross-border trading.
- Voluntary The purchase of CECs would be voluntary.
- Customer Choice IESO was tasked with evaluating market demand via stakeholder engagement and design products to satisfy that demand.
- Monetization C EC offerings should include existing non-emitting generation (nuclear, waterpower, wind, solar, and bio-energy). The IESO would be required to enable proceeds from CEC sales.
- Future Proof The Minister of Energy tasked IESO with designing the Registry to offer flexibility, and with the potential to expand the Registry to other products or markets.
To implement the Registry, the Ministry of Energy is consulting the public on various changes to legislative and regulatory powers, including those under the Electricity Act, 1998. These changes include:
- providing the IESO with authority to establish or designate the Registry, while specifying its administrative requirements;
- authorizing the IESO to act as a market participant and to make available the CECs in its possession;
- allowing the Minister to set rules and requirements for the operation of, or participation in, the Registry;
- allowing the Minister to direct how CEC revenues created by regulated assets owned by Ontario Power Generation Inc. or from IESO's procurement contracts should be used;
- ensuring the retirement of CECs associated with generation facilities in Ontario is allocated to electricity loads; and
- adding reporting requirements for the sale and retirement of CECs.
The Ministry is inviting comments on the proposal posted on the ERO and the proposed Registry until September 16. We will continue to monitor the province's proposal as the consultation and approval process unfolds.
The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.