Ontario has launched a new clean energy credit program designed to attract investment to the province, solidify the clean energy sector and help decarbonize its energy grid.
The province's voluntary Clean Energy Credit Registry allows Ontario companies to buy credits as part of a broader effort to keep electricity rates in check while lowering carbon emissions.
The establishment of the registry allows the province to match similar programs in competing U.S. states including Illinois, Indiana, Ohio, Pennsylvania, Wisconsin and the New England region. These jurisdictions are all selling clean energy credits (CECs), or have otherwise created voluntary registries.
By enabling the purchase of CECs for electricity generated and consumed in the province, Ontario is creating a level playing field with the U.S. The provincial government expects its registry will not only simplify the creation, trading and retirement of CECs, but also stimulate new investment.
"Clean energy has become an economic imperative as companies around the world want to invest in jurisdictions with affordable, reliable and clean energy. Our clean energy credit registry will help us compete and attract more major investments in Ontario’s economy," Todd Smith, the province's minister of energy, said in the announcement.
What are CECs?
CECs are electronic certificates that provide corporations with government verification they have acquired clean energy from Ontario-based power generation sources and have achieved voluntary emissions targets.
According to Ontario Power Generation, the credits "are tracked in a central registry – the Ontario CEC registry – for transparency and auditability, to ensure each clean energy credit is allocated to only one user (i.e., no double counting of environmental attribute ownership)."
The registry has two main objectives:
- First, providing a mechanism which enables companies to objectively measure the achievement of ESG targets by demonstrating they are sourcing their electricity from clean energy sources.
- Second, applying the revenue issuing from the sale of the credits toward keeping electricity rates as low as possible and funding new clean energy programs.
Each credit represents one megawatt-hour of clean energy that has been generated and is intended to be exclusively purchased, claimed or retired by a customer operating within Ontario.
The following clean energy fuel types are included: biofuel, biogas, biomass, hydro, nuclear, solar and wind.
Proceeds from the sale of CECs will fund the construction of clean electricity projects in Ontario through the province's newly created Future Clean Electricity Fund (FCEF).
The government projects sales in the first year of the registry will raise $8 million for the FCEF, and hopes this amount will rise in subsequent years.
Boosting Ontario's clean energy economy
Smith believes the registry will attract capital from U.S. and international corporations under increasing public and political pressure to invest in regions where the power is increasingly being generated by clean, renewable sources rather than hydrocarbons.
Currently, 90 per cent of the electricity generated in Ontario is emissions-free. This puts the province in the enviable position of operating one of the cleanest electrical grids in the world. It also gives Ontario the added advantage of having ample room to sell CECs that are directly linked to nuclear, wind, solar, hydro and bioenergy generation.
The goal of the fund is to further boost Ontario’s clean energy advantage by enabling it to better compete for new investments in the electric vehicle, battery manufacturing, clean steel and other sectors, while continuing to green its economy, according to a press release.
The credits are now available for purchase from Ontario Power Generation and are administered by Ontario's Independent Electricity System Operator (IESO) which will also start selling CECs later this summer.
Carla Y. Nell, IESO's vice-president of corporate relations, stakeholder engagement and innovation, said, "Ontario’s clean energy advantage is driving new business development in the province. Clean energy credits will generate funds for new clean energy projects, offsetting costs for ratepayers while helping us maintain a reliable and clean supply of power for years to come."
Environmental group expresses optimism over registry
Bryan Purcell, vice-president of policy and programs for the Toronto-based environmental watchdog The Atmospheric Fund (TAF), welcomed the government's decision to change key elements of its original CEC plan in response to criticism from TAF and other provincial organizations.
Earlier in March, Purcell had expressed doubts the original CEC plan would lower carbon emissions or have any positive impact on the environment. Now that the language of the revised registry specifically calls for funds to be funnelled to the FCEF, Purcell and the TAF are cautiously optimistic.
"The Clean Energy Credit system as originally proposed would not have led to any emissions reductions," reads a March 31 statement issued by Purcell following the launch of the registry.
"We commend the government for responding to stakeholder feedback, including from The Atmospheric Fund, and adding a requirement for all credit revenues earned by IESO or OPG to be reinvested in new clean energy infrastructure. This requirement will generate new investments in clean energy that will reduce emissions while supporting long-term energy affordability."
Purcell continued: "While details on how the proposed Future Clean Electricity Fund (FCEF) will operate and what it will fund are still to come, this approach addresses a critical shortcoming of the original proposal . . . We look forward to engaging with the Ministry of Energy on further details of the program."