Understanding China’s Green Electricity Certificates (GECs)

Launched as a pilot program in 2017, the Green Electricity Certificate (GEC) system is China’s domestic energy attribute certificate mechanism for tracking the production and consumption of renewable energy. Each GEC represents 1,000 kWh of clean power generated from renewable sources such as hydropower, solar, and wind.

Companies can leverage GECs to claim the environmental benefits of renewable electricity generation, utilizing them for both compliance and voluntary purposes. For entities obligated as key energy consumers under the Energy Dual Control mechanism, the GEC system serves as a market-based solution to reduce fossil energy consumption. Organizations can use GECs to meet their energy consumption reduction targets, driving market demand. Also, China is expected to mandate corporate renewable energy use in the coming years, both at the national and provincial level.

On the voluntary side, corporates and individuals can demonstrate their support for renewable energy and meet their sustainability targets by purchasing GECs. For example, companies that are members of international corporate initiatives like RE100, SBTi, and CDP may choose to procure GECs to help them reach their climate and renewable energy goals under the respective programs.

Transitioning from I-RECs to GECs

Organizations looking to procure energy attribute certificates (EACs) in China currently have several options. In addition to GECs, they can also purchase international certificates such as TIGRs, issued by APX, or I-RECs, issued by the International Tracking Standards Foundation (I-TRACK Foundation). Today, China is one of the largest I-REC markets globally, with more than 47 TWh of I-RECs redeemed in the Chinese market in 2023. The latest disclosure report from the global corporate renewable energy initiative, RE100, also highlights this trend, reflecting that the majority of RE100 members operating in China used I-RECs to support their renewable electricity consumption in 2023.

While the supply of EACs in China has traditionally been dominated by I-RECs, recent policy announcements will lead to a shift from I-RECs towards GECs. In 2023, the “Notice on Full Coverage of Renewable Energy Green Power Certificates to Promote Renewable Energy Electricity Consumption” (NDRC [2023] Document No. 1044) was issued. The notice establishes GECs as the "the only proof of the environmental attributes of electricity in China" and "the only certificate that validates renewable electricity consumption”. It also expands the scope of the GEC scheme to include all types of renewable energy projects, beyond solar and onshore wind. These updates serve as a clear signal from the government for both renewable power generators and corporate buyers to shift towards the GEC system.

In August 2024, the National Energy Administration officially released the "Rules for the Issuance and Trading of China Green Electricity Certificates," establishing a clear framework for the issuance, trading, and transfer of GECs. This move solidifies GECs as the sole recognized proof of the environmental attributes of green electricity in China. The introduction of these rules underscores the growing maturity of the GEC market mechanism, which has been evolving since its launch in 2017.

Following these announcements, the I-TRACK Foundation officially announced that no new electricity generation assets will be registered for I-REC issuance in China, with the issuance of the corresponding certificates to officially stop on March 31, 2025.

Key Considerations for GEC Buyers in China

With the Chinese government's recent announcements, the Green Electricity Certificate (GEC) scheme is set to become the leading green electricity certificate system in China. Its growing importance in the domestic market makes it a crucial tool for enterprises aiming to achieve their decarbonization goals.

Since the implementation of the new policies, the issuance of GEC certificates has surged dramatically. In 2022, 20.6 million certificates were issued, a figure that surged to 176 million in 2023—an 8.5-fold increase. Data from the China Electricity Council shows that the impact on trading volumes has been equally significant as well. In the first five months of 2024, 187 million GECs were traded, increasing 327% since 2023.

For organizations consuming renewable electricity in China, staying informed about regulatory updates and trends is essential. By planning ahead and optimizing procurement strategies, companies can effectively meet their renewable electricity goals. The quicker companies navigate this transition, the greater their benefits in terms of enhanced sustainability, compliance, and competitive advantage in the evolving market landscape.

Hit your renewable energy targets with ACT

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Keen to learn more about the latest GEC trends and regulations? Join us on December 11, as we unpack key regulatory and market updates in the Asia Pacific region and the implications for your renewable energy procurement. Register now!