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I-REC y CEL

October 2, 2023
Written by
Álvaro Rodríguez Portilla
1
min
The Paris Agreement is a legally binding international treaty on climate change. It was adopted by 196 countries at COP21 in Paris on December 12, 2015 and came into force on November 4, 2016.

The Paris Agreement is a legally binding international treaty on climate change. It was adopted by 196 countries at COP21 in Paris on December 12, 2015 and came into force on November 4, 2016.

Its objective is to limit global warming preferably to 1.5 degrees Celsius, compared to pre-industrial levels. To achieve this long-term temperature goal, countries aim to achieve the maximum reduction of greenhouse gas emissions as soon as possible to have a climate neutral planet by the middle of the century.

In that agreement, Mexico pledged that by 2024, 35% of the energy generated and consumed in the country will be clean. However, the federal government itself estimates that only 31% of electricity will be generated by this type of technology by that year.

To achieve the above, a key participant are the companies with the highest production since they are entities that consume large amounts of electrical energy.

One instrument that companies can purchase are Clean Energy Certificates, better known as CELs, are titles that are created with the enactment of the Electric Industry Act.

A CEL is a title equivalent to 1 megawatt-hour (MWh) of electrical energy generated through clean energy sources such as solar, wind, geothermal, hydraulic, etc., whose price is fixed at the corresponding market value.

The Energy Regulatory Commission (CRE) is the authority empowered to grant CELs to this type of Generation projects. However, for this to happen, Exempt Generators and Generators with renewable technology must be accredited in the Wholesale Electricity Market and, in turn, Exempt Generators must be represented within it by a Qualified Service Provider.

In addition to the above, an instrument other than the CELs that certify the production of clean energy are the I-RECs. Although, although these instruments are not accredited by the CRE, I-RECs as financial instruments are recognized internationally unlike CELs, which are only recognized in Mexico.

It is important to mention that, in Mexico, the I-REC Standards are operated in parallel to the CEL system. And just like CELs, I-RECs owners have the freedom to choose how to use them.

That said, it can be concluded that both CELs and I-RECs can be purchased and/or used by electrical industry participants who seek to contribute to the reduction of the carbon footprint, and thus fulfill the commitment of 35% of electricity generation through clean technologies.