Ontario’s clean energy credits are hot air. There are better ways to support clean energy

Ontario businesses and investors are hungry for clean electricity. In response, the Department of Energy commissioned the province’s Independent Electricity System Operator in 2022 to assess options for establishing a registry to support the creation of an energy credit system. clean.

Unfortunately, the proposed system will be little more than greenwashing, making corporate power look cleaner than it is.

The problem with Ontario’s clean energy credits

Clean energy credits are certificates representing one megawatt hour of clean electricity. Ontario’s hydroelectric and nuclear facilities make Ontario’s electricity generation 92% emission-free; With an essentially non-emitting provincial grid, clean energy credits allow companies to purchase and claim credits for this clean generation. Companies that purchase clean energy credits would claim to have lower scope 2 greenhouse gas emissions (indirect emissions from the generation of purchased energy), and revenue from the sale of credits would help reduce emissions. everyone’s electricity rates (as the government has stated is its intention).

But there is a problem: the proposed system would create two contradictory types of corporate emissions accounting. Those who sign up for the program and purchase credits for their electricity use would claim 100% clean electricity. But those who don’t opt-in would report their scope 2 emissions in the usual way – based on the average carbon intensity of the network. Thus, insofar as the network is clean, it would be claimed by both those who opted in (who would say their electricity was 100% clean) and those who didn’t (who would say it’s as clean as average generation). The same self-power would be counted twice.

This kind of approach is misleading and illegitimate. For this to work, companies that did not opt ​​had to state in their own company reports that their electricity was only as clean as the generation mix that remained. after clean energy credits were sold and removed from the generation mix. But changing their corporate emissions reporting in this way would require regulation and turn this voluntary system into a mandatory one.

Building on bad foundations

The proposed system would formalize an equally questionable system that already works. Ontario Power Generation has been selling similar credits since 2013. In 2022, Microsoft announced that it would purchase these credits to offset emissions from its Ontario operations. Microsoft says this will help it achieve its goal of being powered with carbon-free energy. But while the company’s emissions will decrease on paper, nothing will change in the electrical system itself. It will be greenwashing, pure and simple.

In addition, these credit sales will occur while the network dirtier, no cleaner. Ontario is developing 1,500 megawatts of new natural gas-fired capacity to offset the upcoming shutdown of the Pickering nuclear plant. Emissions will therefore increase over the coming decade, not decrease.

Bet on air

Businesses are increasingly concerned about their scope 2 emissions, and there should be ways for them to support clean energy as a way to meet their own climate goals. But such a credit system is not a legitimate way to do this.

There are policies Ontario could adopt if it wants to expand the use of clean electricity and ways to leverage business support. Alberta’s power purchase agreements and reverse auctions could offer some big lessons.

But selling clean energy credits from a polluting grid in an accounting framework that double-counts clean coins is a bad idea.

The resulting credits will be hot air – no real reduction in emissions will occur as a result. And the program will undermine larger decarbonization efforts, wasting the goodwill and financial capital of companies trying to meet their climate commitments.

Ontario’s clean energy credit program should not go ahead.

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