What is I-REC?

The International REC Foundation (I-REC Standard) is a non-profit organization offering a reliable international standard for tracking green attributes. I-REC standard is recognized as the basis for reliable and verifiable tracking tools by major reporting systems such as Greenhouse Gas Protocol (GHGP), Carbon Disclosure Project (CDP) and RE100. Accordingly, I-REC certificates are issued based on this standard.

Link to the I-REC website - https://www.irecstandard.org /#/

I-REC certificate confirms that a certain amount of electricity is generated using renewable energy sources. The certificate is tied to 1 MWh of pure electric power, the geographical location of the power plant and the time interval of electricity generation. It is important to note that a power plant cannot issue certificates twice in a certain period. I-REC standard consists of a number of rules and best practices that ensure a high level of tracking the issuance and redemption of certificates by applying a single I-REC Registry, eliminating the possibility of double-counting green certificates.

The Registry is an Internet resource (website) where users fr om all over the world register. The registry stores extensive information about certificates, generators, issuing organizations, etc. The place of issue of the certificate, the type of renewable energy (solar, wind, hydro, bio, etc.), the selected period, amount of electricity generated, and the contact details of the organizations that issued and redeemed the certificates are taken into account. Thanks to the Registry, it is possible to keep statistics and accounting for the issuance of certificates, both in a separately selected country and around the world.

I-REC system is presented in 51 countries with 19 accredited organizations. As of December 2021, the total issue of I-REC certificates amounted to 63 TWh. In general, certificates are issued and traded in the local area. However, the transfer of certificates between countries is not excluded, subject to a number of nuances.

The certificate itself is a PDF file of two pages, which displays: the amount of certified electricity generated (1 certificate = 1 MWh), contact details of the electricity generator, the generation period, the type of renewable energy, etc. Generators have the opportunity to issue certificates exclusively for the actually generated renewable electricity, approximately for the past 12 months.

The use of I-REC certificates by one or another company is voluntary.

The participants of the I-REC system are divided into three types:

1)     Registrant is a generator of renewable electricity.

2)     A market participant is any person holding or trading I–REC certificates.

3)     The issuing organization is an I–REC accredited organization that registers generating companies and power plants in the Register. ECOJER Association (https://ecojer.kz /) is an I-REC credited organization In the Republic of Kazakhstan.

To issue I-REC certificates, a renewable electricity generator (registrant) goes through the following stages:

1.     Conclusion of an agreement with the ECOJER Association;

2.     Power plant registration;

3.     Issue of certificates.

Stage 1. Conclusion of an agreement with the ECOJER Association

Upon the request of a potential registrant, the ECOJER Association sends a standard "Agreement on standard conditions for issuing certificates".

In case of agreement with the terms, the registrant sends a scan of the signed Agreement accompanied by documents required.

Within a few days, I-REC will send the registrant the necessary information to access the unified I-REC Registry: Login and Password.

Having gained access to the personal account of the Registry, further document flow between ECOJER and the registrant on the registration of the power plant and the issuance of certificates is carried out through Registry at: https://evident.app / .

Stage 2. Power plant registration

Having gained access to the personal account of the Registry, the registrant can submit an application for registration of its power plant(s).

Stage 3. Issue of certificates

Certificates are issued per unit of generated electricity (MWh per certificate) of a registered power plant for a certain period. For example, until May 31, 2022, certificates can be issued for the period:
January 2021 – May 2022. Fr om June 1 to September 30, 2022, the issue is possible for the period July 2021 – September 2022. From October 2022, the issuance of certificates for any period of 2021 becomes impossible. For more information about the deadline dates for applying for certificates, see the table below (the deadline dates are approved annually).

Table: Deadline dates for submitting applications for the issuance of certificates determined by I-REC for 2022.

 The process of selling I-REC certificates

There are two ways to sell certificates: 1) by concluding a bilateral agreement with the buyer; 2) with the support of intermediaries (traders / brokers).

If a "registrant" account is used to issue certificates, then a "market participant" account is used to redeem certificates. The latter is usually purchased by traders/brokers or buyers. In some cases, generator companies obtain a "market participant" account in order to be able to provide a full range of services for the sale of certificates for the final beneficiary. At the same time, the final beneficiary does not need to purchase an account in the Registry.

When redeeming certificates, a market participant fills out a form wh ere he indicates the contacts of the final beneficiary. Thus, there are several options for selling or buying certificates. The price of the certificate is determined by the market.

 Application of certificates

In general, the demand for certificates arises among large/international companies that have made voluntary commitments to reduce their environmental footprint, using ESG principles, etc.

In general, international standards for calculating emissions distribute emissions into 3 scopes. Wh ere, Scope 1 defines direct emissions, Scope 2 defines indirect emissions, Scope 3 defines all other indirect emissions, including emissions from outsourcing contracts, leases, franchises, etc.

Due to the fact that I-REC certificates confirm the generation of green electricity, and not a direct reduction in greenhouse gas emissions, they are used within Scope 2.

It is proposed to consider the recent case of the use of I-REC certificates in the field of international trade. In February 2021, Emirates Global Aluminum announced the sale of 40,000 tons of aluminum produced using solar energy to the BMW Group. Solar energy was provided by Dubai Electricity and Water Authority and Mohammed bin Rashid Al Maktoum Solar Park. During production, 560,000 MWh of solar energy was consumed, for which I-REC certificates were issued. In this regard, taking into account the environmental value of aluminum, BMW Group has agreed to conclude a contract for bulk purchase from the United Arab Emirates.

Consequently, I-REC certificates have the potential to increase the competitiveness of Kazakhstani enterprises by greening operations and products. It is important to note that in accordance with the principles of green financing, more environmentally responsible companies are more likely to receive more profitable loans from financial institutions.