green electricity certificates to cover all renewables

context: GECs (Green Electricity Certificates) are the PRC's version of renewable energy certificates, but until the release of a new Notice by several potential supervisory agencies, their role in promoting renewable energy electricity has been unclear. 

NDRC (National Development and Reform Commission), MoF (Ministry of Finance) and NEA (National Energy Administration) jointly issued ‘Notice on promoting renewable energy electricity through full coverage of GECs (green electricity certificates)’ on 3 August. The new policy makes it clear that GECs (Green Electricity Certificates) will be the exclusive mechanism for verifying renewable power consumption within the country. Nonetheless, the directive gives rise to a potential challenge regarding the integration of GECs with the CCER (China Certified Emissions Reduction) scheme, which also encompasses renewable projects and is expected to recommence later this year. Further measures can be expected to prevent dual counting and ensure transparency. The new policy clarifies that the GEC scheme will expand from only covering utility-scale solar and on-shore wind projects to now cover the whole renewable power generation sector, including 

  • decentralised and offshore wind power 
  • distributed PV and solar thermal power 
  • conventional hydropower 
  • biomass, geothermal and wave power 

The Notice stipulates that GECs can now only be traded once from seller to buyer to prevent speculation. Hydropower projects connected to the grid before 1 Jan 2023 will not be able to generate tradeable GECs, but new hydropower projects connected to the grid after 1 January will be able to generate tradeable GECs on a merchant basis. Trading platforms for GECs include the China Green Power Certificate Trading Platform, Beijing Power Exchange and Guangzhou Power Exchange, with further expansion to other nationally approved trading platforms encouraged. 

Projects that enjoy central financial subsidies will be able to sell GECs, provided that the power is sold via the market and income from the transaction offsets the value of the subsidy received. 

Fostering consumer demand is expected to play a crucial role in the future development of the GEC market, as indicated by a representative from the China Electricity Council in a conversation with Caixin. While the GEC market used to operate on a 'voluntary subscription' basis, it is anticipated that it might transition to a 'rigid demand' model in the coming years. This shift could involve linking GEC transactions with the assessment mechanism for renewable energy quotas. Presently, all provinces bear the responsibility for achieving targets related to renewable power consumption. However, with the Notice clarifying that GECs are the only means of certifying green power consumption, this responsibility could potentially shift towards consumers.

The Notice outlines five major tasks for supporting the GEC scheme, according to NDRC and NEA officials. These include  

  • fully supporting green power trading as a mid to long-term power trade where users can obtain both green power and GECs
  • giving full play to the function of GECs that are tamper-proof, traceable and accurately identify renewable power consumption 
    • implementing requirements for renewable energy consumption to not be included in the ‘dual control’ of energy consumption and energy intensity 
  • establishing green power consumption certification standards and identification systems 
  • linking up with the national carbon market 
    • the Notice promotes further research on the connection and coordination of the GEC scheme with the National Carbon Market and the Voluntary Greenhouse Gas Emissions Reduction Trading Mechanism (i.e., the CCER) 
      • the aim is to include GECs in the carbon market-related accounting system 
  • promoting international mutual recognition of GECs
    • the Notice clarifies that in principle, domestic renewable power projects can only apply for domestic GECs