Could Energy Credits become a bigger part of the future? With more companies and businesses being called to contribute more to a greener future, many companies and businesses are making reduced carbon emissions goals by buying energy credits. Whether energy credits are actually helpful, however, is well-debated, and detractors argue that it could be an excuse for greenwashing, not actually committing to reducing emissions, and therefore not contributing to a more sustainable world as promised. 

What Are Energy Credits?

Energy Credits are certificates that represent one megawatt-hour of clean electricity. Ontario’s hydro and nuclear facilities make Ontario’s electricity generation 92 percent non-emitting; with a mostly non-emitting provincial grid, clean energy credits allow companies to buy and claim credit for this clean generation. 

Companies that buy clean energy credits would claim to have lower Scope 2 greenhouse gas emissions (indirect emissions from the production of purchased energy), and the revenue from credit sales would help reduce everyone’s electricity rates (as the government has stated is its intent).

Clean energy credits help companies achieve voluntary corporate Environmental, Social, and Governance (“ESG”) goals by allowing them to claim that the electricity they consume from the grid comes from clean or low-emitting generation sources. This ensures that no other consumer can make the same claim and that they can reduce their carbon footprint.

Electricity consumers can purchase CECs from Ontario Power Generation (OPG). Transfer of the credits from OPG to the consumer happens through a central registry, which certifies that this electricity comes from a clean or low-emitting generating source.  The registry also tracks the credits and ensures that ownership claims are not double-counted. OPG currently transfers ownership of its clean energy credits using reliable third-party registries such as the Midwest Renewable Energy Tracking System (M-RETS) or via Attestation Letters.

However, there are some criticisms when it comes to using energy credits. Arguments against it include that it makes companies’ emissions go down on paper, but nothing will change in the electricity system itself. Not only is using energy credits not actually doing anything but could act as a form of greenwashing.  Using RECs also allows companies to claim they reduced scope two emissions by writing a check, while it can continue to put out greenhouse gases as before. Because many companies still take this route to reduce emissions instead of other alternatives, critics of RECs say the effort to reduce real-world emissions are undercut.

What do you think about the use of energy credits? Do you think it will become a larger part of our future? Let us know by tagging us at @SustainableWat! 

Are you an organization wanting to make use of energy credits? You can read more about it here!