The Ministry of Trade and Industry (“MTI“), the Energy Market Authority (“EMA“), and International Tracking Standard Foundation (I-TRACK Foundation) will develop a framework for Cross-Border Renewable Energy Certificates (“RECs“) (“Framework“) that is relevant for Southeast Asia.
Key Features of the Framework
- The aim of the Framework is to assist countries to standardise their approaches for the tracking and accounting of cross-border RECs across three areas:
- how they track the physical flow of electricity and the corresponding RECs;
- the REC registries and instruments which are permitted for cross-border electricity trading transactions; and
- the approach for calculating the residual mix, which refers to the electricity that remains in a country’s power system after subtracting all renewable energy tracked by RECs.
The Framework also functions as a pathfinder project contributing to the Association of Southeast Asian (“ASEAN“) Centre of Energy’s efforts to develop an ASEAN regional REC framework by 2027.
- Sets out national rules and guiding principles for credible disclosure of Cross Border Electricity Trade (“CBET”) transactions using Energy Attribute Certificates (EACs) or RECs between Country X and its trade partners. It aligns with the International CBET Standard and Best Practices, but does not override existing laws or agreements.
- The completed Framework will provide a template for user countries to account for the RECs associated with cross-border electricity trading. Countries can use the Framework to align with relevant internationally accepted standards for cross-border RECs and illustrate how global best practices are being implemented in their energy markets.
- The Framework applies only to CBET REC transactions involving physical import/export of electricity between Country X and its partners. Both countries must have compatible frameworks and meet normative requirements.
- The Framework operationalises Country X’s principles for credible CBET RECs, aligned with the CBET Standard. Accreditation or compliance is to be confirmed by the I-TRACK Standard Foundation or a Reasonable Assurance Statement.
- Stakeholders include government ministries, regulators, grid operators, project developers, buyers, and third-party verification bodies.
For further details, please refer to the draft Framework, available here.
Companies that purchase cross-border RECs will be able to make exclusive claims for their sustainability reporting, without concerns that the same unit of renewable electricity is being claimed by some other entity.
MTI and EMA have commenced industry consultation.
Disclaimer
Rajah & Tann Asia is a network of member firms with local legal practices in Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. Our Asian network also includes our regional office in China as well as regional desks focused on Brunei, Japan and South Asia. Member firms are independently constituted and regulated in accordance with relevant local requirements.
The contents of this publication are owned by Rajah & Tann Asia together with each of its member firms and are subject to all relevant protection (including but not limited to copyright protection) under the laws of each of the countries where the member firm operates and, through international treaties, other countries. No part of this publication may be reproduced, licensed, sold, published, transmitted, modified, adapted, publicly displayed, broadcast (including storage in any medium by electronic means whether or not transiently for any purpose save as permitted herein) without the prior written permission of Rajah & Tann Asia or its respective member firms.
Please note also that whilst the information in this publication is correct to the best of our knowledge and belief at the time of writing, it is only intended to provide a general guide to the subject matter and should not be treated as legal advice or a substitute for specific professional advice for any particular course of action as such information may not suit your specific business and operational requirements. You should seek legal advice for your specific situation. In addition, the information in this publication does not create any relationship, whether legally binding or otherwise. Rajah & Tann Asia and its member firms do not accept, and fully disclaim, responsibility for any loss or damage which may result from accessing or relying on the information in this publication.
