Expert interpretation: Give full play to the characteristics of carbon trading and green certificate mechanisms to help carbon peak and carbon neutrality
Recently, the Comprehensive Department of the National Energy Administration and the General Office of the Ministry of Ecology and Environment jointly issued the "Notice on Connecting Renewable Energy Green Power Certificates and Voluntary Emission Reduction Markets." The boundaries between the green certificate market and the voluntary emission reduction market and the specific requirements for connection have been further clarified.
Both green certificates and national voluntary greenhouse gas emission reduction transactions are important market-oriented mechanisms to promote green development. What are the differences in their functions and positioning? Why do we need to connect? How can relevant measures help achieve the goal of carbon peaking and carbon neutrality?
A reporter from Beijing Youth Daily interviewed Zhang Xin, chief economist of the National Center for Strategic Research and International Cooperation on Climate Change, and Zhang Xiliang, director of the Institute of Energy, Environment and Economics of Tsinghua University, to interpret relevant issues.
two mechanisms
Provide economic incentives for renewable energy development
The voluntary emission reduction trading market is a major institutional arrangement to actively respond to climate change and promote green and low-carbon transformation of the economy and society. Together with the national carbon emissions trading market, it constitutes the national carbon market system. Certified voluntary emission reductions (CCERs) in the voluntary emission reduction market can be used for quota settlement and offset in the carbon emissions trading market, green supply chain management, performance of social responsibilities, and carbon neutrality of large-scale activities, enterprises, and products. As of July 15, 2024, approximately 472 million tons of CCER have been sold, with a turnover of approximately 7.092 billion yuan.
The green certificate is an electronic "ID card" for renewable energy green power. It is the only certificate for identifying the production and consumption of renewable energy power. A green certificate can correspond to 1000 degrees of renewable energy green power. Data shows that as of the end of August 2024, a total of 1.841 billion green certificates have been issued and 314 million green certificates have been traded across the country, with a significant increase in transaction volume.
Zhang Xin, chief economist of the National Center for Climate Change Strategic Research and International Cooperation, said that my country's carbon trading mechanism and green certification mechanism are both green and low-carbon development mechanisms that actively and steadily promote carbon peak and carbon neutrality, which will help promote renewable energy development and green and low-carbon power supply structure. Although both mechanisms are still in the construction stage, promoting green and low-carbon energy development has begun to show results and provides effective economic incentives for the development of renewable energy.
Promote connectivity
Avoid duplicate benefits from projects
However, renewable energy projects may have duplicate benefits from green certificates and voluntary emission reduction mechanisms. Zhang Xin introduced that the green certificate mechanism covers all types of renewable energy projects and provides indiscriminate incentives. The national voluntary greenhouse gas emission reduction trading market strictly follows the requirements of technical specifications and selects renewable energy projects that are additionality, that is, have real emission reduction effects, require more economic support, and have more significant social effects, and are voluntarily developed to provide economic incentives.
In October 2023, the Ministry of Ecology and Environment issued the "Measures for the Management of Voluntary Greenhouse Gas Emission Reduction Trading (Trial)" to formulate methodologies for projects such as far-reaching offshore wind power and solar thermal power generation; in September 2024, the first batch of China certified voluntary emission reduction (CCER) projects were officially launched in September, covering 5 solar thermal projects and 22 offshore wind power projects.
The "Notice on Connecting Renewable Energy Green Power Certificates with the Voluntary Emission Reduction Market" issued this time clarifies that for far-reaching offshore wind power and solar thermal power generation projects, if you plan to choose to participate in green certificate trading, the corresponding electricity quantity shall not apply for CCER; If you plan to apply for CCER, after completing the review and registration of voluntary emission reduction projects, the Qualification Center of the National Energy Administration will "freeze" green certificates that have not been traded during the counting period; After completing the verification and registration of emission reductions, the Qualification Center of the National Energy Administration will cancel the untraded green certificate corresponding to the emission reductions and disclose the information to the public.
Zhang Xiliang, director of the Institute of Energy, Environment and Economics at Tsinghua University, pointed out that this avoids the repeated benefits of far-reaching offshore wind power and solar thermal power generation projects from green certificates and CCER at the institutional level, clarifies the boundaries of the green certificate market and the voluntary emission reduction market, and also helps Accelerate the international recognition of my country's green certificate.
It is worth noting that the "Notice" also establishes a two-year transition period starting from October 1, 2024. After the transition period, the operation of the green certificate and CCER market will be integrated, and the connection requirements of the green certificate and CCER market for far-reaching offshore wind power and thermal power generation projects will be adjusted in a timely manner.
coordinated development
Policy space has been set aside
As the "double carbon" goal continues to advance and the power market reform continues to deepen, the coordinated development of green certificates and carbon markets has become increasingly important. The "Opinions of the Central Committee of the Communist Party of China and the State Council on Accelerating the Comprehensive Green Transformation of Economic and Social Development" issued recently clearly stated that it is necessary to improve the green power certificate trading system and strengthen policy coordination among market-oriented mechanisms such as green electricity, green certificates, and carbon markets.
According to existing rules, my country's green certificate mainly targets the environmental rights and interests of purchased electricity, and its emission reduction belongs to "Scope 2", which is indirect emissions. Currently, companies that join the Science-Based Carbon Targets initiative (SBTi) can reduce their Scope 2 emissions by purchasing green certificates. Regarding the application of green certificates in carbon emission accounting, Zhang Xiliang introduced that the national fossil energy electricity carbon dioxide emission factor jointly announced by the Ministry of Ecology and Environment and the National Bureau of Statistics excludes the country's non-fossil energy electricity, and the deducted part covers green certificates. Trading electricity, companies using green certificates can use this factor to calculate carbon emissions.
In terms of the carbon market, the emission reductions of CCER projects can be classified into different ranges such as "Scope 1"(direct emissions), Scope 2 (indirect emissions), and Scope 3 (other indirect emissions) according to circumstances. The carbon emissions trading market only covers direct emissions in scope 1, and indirect emissions in scope 2 are not included.
In September this year, the Ministry of Ecology and Environment publicly solicited opinions on the "Work Plan for the National Carbon Emissions Trading Market to Cover the Cement, Steel, and Electrolytic Aluminum Industries (Draft for Comments)". The "Plan" clarifies that direct emissions from the cement, steel, and electrolytic aluminum industries will be included in the control, with about 1500 new key emission units, covering a new increase in emissions of about 3 billion tons. Indirect emissions from the use of electricity will not be included in the control.
In Zhang Xiliang's view, this does not mean that key industries will not need to increase the proportion of green electricity in power consumption in the future, but it will leave policy space for the future assessment of the completion of renewable energy consumption responsibilities of key energy-using units passing green certificates.
