Cross-border trading of Energy Attribute Certificates (EACs) has long been a challenge. Outside Europe and North America, where energy tracking systems are shared between countries, reporting standards—such as the Greenhouse Gas Protocol (GHG-P) and RE100—consider every nation to be its own market.
This happens even though physical power is already flowing between countries. South East Asia is a very clear example. “Power transfers already happen at scale from Laos into Thailand, but the attributes are not travelling with the electrons,” says Roble Poe Velasco-Rosenheim, Director of Global Partnerships and APAC at the I-TRACK Foundation.
Prompted by the launch of the Australia–Singapore Sun Cable, a 4,300 km transmission line from Australia’s Northern Territory to the APAC region, corporate consumers in Singapore, historically a difficult market for EAC buyers, saw an imminent need for claiming the environmental attributes of the clean electricity that would flow their way. So, the I-TRACK Foundation engaged in talks with the clean energy buyer coalition RE100, starting with a simple question: what do they consider credible EAC transfers?
An earlier document by the GHG disclosure project CDP, entitled Accounting for Cross-Border Renewable Energy Trade, had already established best practices for this type of transaction. “What was lacking was a pass-fail set of rules for the transfer of renewable attributes,” Velasco-Rosenheim continues. “The standards hadn’t developed one because they weren’t sure that governments really wanted this and didn’t want to act in advance.”
The Singaporean government decided to partner with the I-TRACK Foundation to develop a Renewable Energy Certificate (REC) Framework to support cross-border electricity trade (CBET). Laos and Thailand also became an obvious use case. A new framework began taking shape.
Created in collaboration with governments, regulators, and other stakeholders, the CBET Framework is structured along three separate documents designed to be voluntary, transparent, and actionable.
The first document is the CBET Standard and Best Practices. Echoing CDP’s previous work, it defines CBET rules along three axes: deliverability, or the certainty that electricity is flowing from a given device in country A to a specific consumer in country B at a given time while accounting for grid loss; the alignment of EAC systems in both countries to avoid double counting; and the disclosure and comparability of national residual mixes.
If this sounds like work for national administrations, that is correct. “Achieving CBET mostly depends on national governments agreeing on rules for transactions to be credible,” Velasco-Rosenheim says. “The question is how both countries can show that they are meeting these best practices.”
Enter the second document, the Template National CBET Framework, which governments can fill out to evidence how they are facilitating cross-border trade. “The document does not dictate how governments should calculate, for example, residual mixes,” Velasco-Rosenheim continues. “Rather, it enables them to choose their methodologies and show their workings. It really gives agency to countries.”
Once the markets are aligned, the last component is to attest that a specific clean energy generation device and the individual EACs issued from it are CBET-eligible. This can be done two ways. An independent auditor can review the data provided in the above-mentioned documents and validate that a batch of EACs meets the requirements set out in the CBET Standard.
Alternatively, production assets and EACs can be individually tagged by a label authority. “You end up with, for example, a Laos-issued I-REC that says it was produced at a certain hour, from a certain production facility eligible for consumption in Thailand. All the necessary information gets bolted under that label,” Velasco-Rosenheim explains.
By tagging individual EACs, countries can also select the facilities and renewable energy volumes that they want to participate in cross-border trade.
“It’s important to keep in mind that the fact that CBET transactions are permitted between two countries does not open the gate for all generation produced in one country to be consumed in another,” Velasco-Rosenheim adds. “We’re looking at specific assets that have an awarded license to export a limited volume of energy during a defined period.”
In some markets, cross-border EAC trade happens continuously and virtually without restrictions. Europe is the clearest example. Interconnected by power lines and sharing a single EAC system, Guarantees of Origin (GOs) are automatically fit for cross-border trade within countries that belong to the Association of Issuing Bodies (AIB). In contrast, CBET would allow for trade of electricity and EAC volumes that are mutually agreed upon by two countries.
Additionally, the GHG-P is in the process of revising its Scope 2 Guidance, which could change the organisation’s definition of market boundaries and its rules for the transfer of certificates. The I-TRACK Foundation remains agnostic. “Our intention is in no way to qualify good or bad practices, but to show what the standards share in common and facilitate cross-border trade,” Velasco-Rosenheim emphasises.
The CBET Framework is currently under review by most of the major corporate sustainability entities. “We have received very positive feedback so far,” Velasco-Rosenheim says. The I-TRACK Foundation, however, remains cautious and awaits the results of the revision processes, to be concluded in the next few months.
Exactly how endorsement could be reflected is also undetermined. “Our best-case scenario is that they will reference the CBET Framework in their guidance as one of the ways to prove cross-border energy attribute ownership,” Velasco-Rosenheim says.
The revision of the GHG-P Scope 2 Guidance includes a debate on whether to require obligatory hourly matching of energy attribute certificates—commonly known as 24/7 matching—which mandates buyers to purchase EACs produced in the same hour as the consumption they intend to cover.
“The CBET Standard does not require 24/7 matching, but it is possible that entities using it will want to align. This could work as an add-on to be used at the buyer’s discretion,” Velasco-Rosenheim explains.
The CBET Framework is an enabling tool. It does not provide a rigid recipe but rather opens possibilities for wider markets and the benefits they generate. Take helping finance new renewable generation through Power Purchase Agreements (PPAs) as an example.
“We have received questions from producers as to whether their projects, which need financing and credits at de-risked rates, will be CBET-eligible,” Velasco-Rosenheim says. “We have also heard from energy buyers in Singapore that they are only investing in a project across national borders because we are going to be able to claim the renewable attributes.” If clean electricity is not bound by national borders, their attributes and the financial gains they catalyse should be free to flow too.