Renewable energy electricity boasts characteristics such as zero carbon emissions, cleanliness, environmental friendliness, and renewability. Developing renewable energy is an inevitable requirement for the global energy revolution and for green, low-carbon development. China has already pledged to the world that by 2020 and 2030, the share of non-fossil energy in primary energy consumption will reach 15% and 20%, respectively, and that carbon emissions will peak by 2030. Establishing a renewable energy quota system (hereinafter referred to as the “quota system”) and a green electricity certificate (hereinafter referred to as the “green certificate”) trading mechanism represents an important pathway for China to promote the development of renewable energy, drive reform of the energy system, and achieve its targets for non-fossil energy consumption. An important pathway.

　　I. International Experience

　　(1) The quota system and green certificate trading are important mechanisms for promoting the healthy development of renewable energy. An important means of development

　　The renewable energy quota system refers to a mandatory regulation imposed by the government through laws and regulations, specifying the market share that renewable energy electricity must achieve. Entities failing to meet their quota obligations are required to pay corresponding fines, with the aim of increasing the proportion of renewable energy utilization. Internationally, the green certificate trading system is typically regarded as an important complementary mechanism to the quota system. Under this system, the government issues green certificates to renewable energy generation enterprises in quantities corresponding to their grid-connected electricity output. Entities with quota obligations can fulfill their targets by purchasing green certificates from these generation enterprises. The introduction of green certificate trading serves primarily two purposes: First, it provides quota-obligated entities with greater flexibility in meeting their quotas. Given the volatile nature of renewable energy resources and the uneven regional development across different areas, the quota system—being a single-standard, highly coercive administrative measure—can benefit from the introduction of market-based trading, offering quota-obligated entities a variety of options for achieving their targets. Second, it leverages market forces to discover prices and thereby promote technological advancement in renewable energy. Compared to fixed-price subsidy systems, which rely on administrative measures to provide fixed subsidies, green certificate trading primarily uses market mechanisms to generate additional revenue for renewable energy projects. The price of green certificates is determined by market dynamics, which helps foster technological progress and reduce costs in the renewable energy sector.

　　Currently, more than 20 countries—including the United Kingdom, Australia, Sweden, Japan, and South Korea—as well as 29 U.S. states and the District of Columbia, have all implemented quota-based policies. The entities responsible for fulfilling these mandatory quotas vary: in some cases, it is electricity retailers (as in most U.S. states and the UK), while in other cases, it is power-generation companies (as in South Korea). International experience shows that quota systems combined with green certificate trading represent one of the key mechanisms for promoting the sustainable and healthy development of the renewable energy industry. Since introducing its quota system in 2002, the United Kingdom has seen the share of renewable energy generation rise from less than 2% to over 25% by the end of 2017. In the vast majority of U.S. states that have adopted quota systems, compliance with quota obligations has been smoothly achieved on schedule, greatly boosting the growth of wind and solar power industries. Since implementing its quota system in 2012, South Korea has experienced annual average growth rates of over 100% in installed solar capacity for three consecutive years, rapidly establishing itself as the third-largest photovoltaic market in Asia, behind only China and Japan.

　　(2) Voluntary purchase of green certificates is an important avenue for the general public to engage in environmentally friendly public welfare activities. An important avenue for beneficial activities

　　In addition to the mandatory trading of green certificates, individuals and enterprises that have the financial means and environmental awareness can voluntarily purchase green certificates to support the development of renewable energy. Currently, dozens of countries and regions—including the United States, Japan, and the European Union—offer voluntary channels for trading green certificates. In countries such as those in Europe and the U.S., consuming green electricity has become a widespread practice and has emerged as an important avenue for the general public to engage in environmentally friendly and socially beneficial activities. Internationally renowned companies place great importance on consuming green electricity. As of the end of 2017, more than 122 companies worldwide had committed to achieving 100% use of renewable energy electricity in the future. Use renewable energy electricity.

　　II. Development of China’s Quota System and Green Certificate Trading Development Status

　　(1) The quota system is about to be introduced.

　　China has conducted multiple studies on the implementation of a quota system. In recent years, the state has repeatedly mentioned “studying and formulating a renewable energy power quota system” in a series of important policy documents, including the “Decision on Accelerating the Cultivation and Development of Strategic Emerging Industries” and the “Energy Development Strategy Action Plan (2014-2020).” In November 2017, the National Development and Reform Commission and the National Energy Administration jointly issued the “Implementation Plan for Addressing the Issues of Abandoned Hydropower, Wind Power, and Solar Power,” proposing the adoption of a quota system as a key institutional measure to tackle the “three types of abandonment.” Currently, the “Measures for Renewable Energy Power Quotas and Assessment” have completed their first round of public consultation and are expected to be released before the end of 2018. The quota system is a significant, complex, and wide-ranging policy for the renewable energy sector. It is anticipated that once implemented, the system will promote the healthy development of the renewable energy industry from multiple aspects, including consumption, operation, and subsidy mechanisms.

　　1. The responsibilities of local governments and market entities in renewable energy consumption will be clearly defined. Currently, China’s targets for the share of non-fossil energy consumption and its renewable energy development plans remain at the central planning level only, leaving the responsibilities and obligations of local governments and market entities in renewable energy development insufficiently clear. By setting renewable energy consumption targets on a provincial basis through a quota system and assessing market entities’ compliance with their quota obligations, the quota system can significantly enhance the enthusiasm of both local governments and market entities to develop and consume renewable energy.

　　2. We will promote the effective implementation of the policy on guaranteed full-amount procurement of renewable energy. China has already introduced a policy guaranteeing full-amount procurement of renewable energy, but relevant supporting policies are still lacking. The introduction of a quota system can provide a strong lever for implementing the policy on guaranteed full-amount procurement of renewable energy, ensuring that renewable energy sources are given priority in power generation.

　　3. We will accelerate the phasing out of subsidies for new energy electricity prices. As new energy sources scale up, the demand for subsidies is rapidly increasing. By implementing a quota system and a green certificate trading mechanism, we can provide new energy power generation enterprises with additional financial compensation, thereby effectively reducing the need for subsidy funds and accelerating the achievement of grid parity for new energy.

　　(2) Voluntary subscription to green certificates has achieved initial success.

　　China adopts a feed-in tariff policy for renewable energy, under which the grid-connected electricity prices are set by the government. Any portion of the electricity price that exceeds the benchmark coal-fired power price in the local area is subsidized by the Renewable Energy Fund. With the support of the national electricity price subsidy policy, China’s renewable energy industry has developed rapidly and played a significant role in increasing the share of non-fossil fuel consumption. However, as China’s economy continues to develop and public awareness of environmental protection gradually rises, the current practice of uniformly collecting renewable energy subsidies from all electricity users across society fails to reflect the differences in green and environmental awareness among various enterprises and individuals. Although some enterprises and individuals with a strong sense of social responsibility are willing to support the development of renewable energy, they lack an authoritative channel through which they can provide targeted support independently.

　　To encourage green electricity consumption across society, improve the subsidy mechanisms for wind and photovoltaic power generation, and broaden the sources of funding for renewable energy subsidies, in January 2017, the National Development and Reform Commission, the Ministry of Finance, and the National Energy Administration jointly issued the "Notice on the Pilot Implementation of the Issuance and Voluntary Purchase Trading System for Green Electricity Certificates for Renewable Energy (NDRC Energy [2017] No. 132)," clearly stating that the voluntary purchase system for green certificates would be piloted nationwide starting from July 2017.

　　As of the end of July 2018, the cumulative number of green certificates issued in China had reached 22.88 million, with a total of nearly 30,000 certificates subscribed. This has helped reduce renewable energy subsidy expenditures by approximately 5 million yuan. Looking at the subscribers of green certificates, we find not only Chinese companies in the new-energy manufacturing sector, government agencies, internet enterprises, multinational energy users, and international research institutions, but also members of the general public from all walks of life. By taking concrete actions, they are putting the concept of green consumption into practice and truly serving as pioneers in green electricity consumption.

　　From the overall pilot program, China’s voluntary green certificate subscription has achieved initial success. First, a green certificate issuance system has been established, concretely quantifying the environmental benefits of clean energy and effectively unlocking the development potential of renewable energy. Second, a voluntary green certificate subscription system has been put in place, offering energy consumers a new choice and providing a convenient channel for all sectors of society that embrace green consumption principles and care about sustainable development. Third, valuable experience has been accumulated in implementing this system, creating favorable conditions for the full-scale rollout of the green certificate trading system in the next phase.

　　III. Situation and Outlook

　　Currently, China’s renewable energy technologies continue to advance steadily, and electricity prices have been declining rapidly. As a result, the primary challenge in promoting grid parity for wind and photovoltaic power is gradually shifting toward improving the external environment. The implementation of quota systems and mandatory trading of green certificates currently aims primarily at addressing the issue of renewable energy consumption while gradually phasing out small-scale subsidies. At the same time, voluntary subscription to green certificates is being introduced as a complementary source of funding for renewable energy subsidies.

　　In the future, as renewable energy generation enters the era of grid parity, China’s mandatory green certificate trading and voluntary green certificate purchases will eventually merge into a single system—becoming certificates of renewable energy consumption that provide additional revenue for renewable energy power. At that time, green certificate prices will drop significantly, and the market for green certificates will have even greater room for growth.

In the future, as renewable energy generation enters the era of grid parity, China’s mandatory green certificate trading and voluntary green certificate purchases will eventually merge into a single system—becoming certificates of renewable energy consumption that provide additional revenue for renewable energy power. At that time, green certificate prices will drop significantly, and the market for green certificates will have even greater room for growth.

　　Article link: China Environmental Protection Online http://www.hbzhan.com/news/Detail/127096.html

Article link: China Environmental Protection Online http://www.hbzhan.com/news/Detail/127096.html