China’s NDRC recently issued a guideline to boost the Green Electricity Certificate (GEC) market by stimulating consumption demand. This policy aims to address market challenges and promote green electricity use. The article explores these developments and offers insights for optimizing GEC procurement.
Background Information
On the 18th March 2025, the National Development and Reform Commission (NDRC) and four other departments jointly issued the Guideline on Promoting the High-Quality Development of the Renewable Energy Green Electricity Certificate Market.
The guideline aims to solve:
- The long-standing supply-demand imbalance
- Low prices
- The underestimated environmental value of the green electricity certificate (GEC) market
- And to promote the development of a high-quality green electricity certificate market.
Policy Interpretation
Two main objectives:
The key focus change of the GEC policy: from improving the market system to stimulating consumption demand
According to the policy development figure below, China’s green electricity market has undergone rapid development in the past two years. The policy focused on rule-making and framework building in the early stage, whilst it is now shifting to focus more on the demand-side incentives. It aims to guide market players to take the initiative to increase the proportion of green power consumption by strengthening the consumer-side driving mechanism. This transition indicates the market has almost reached maturity. The market will subsequently try to go on and stimulate demand, strengthening the GEC market.
Mandatory consumption requirements of GEC
The new policy outlines the following key requirements:
- Requirement #1: Increase green electricity consumption among enterprises and data centers in steel, nonferrous metals, building materials, petrochemical, chemical and other industries, as well as other key energy-using units and industries. In principle, the target should be no lower than the national average ‘Renewable Portfolio Standard’ (RPS) targets for total renewable electricity consumption by 2030. The proportion of green electricity consumption of the newly built data centers of the national hub nodes should be further increased on the basis of 80%.
- Analysis: The coverage of GEC compulsory consumption has been expanded significantly. The original binding requirements for green electricity consumption in the electrolytic aluminum industry and new data centers have been extended to other high-energy-consuming industries and all data centers. The green transformation has been accelerated by strengthening the industry’s binding force.
- Requirement #2: Details of green electricity consumption should be included in companies’ annual environmental, social and corporate governance (ESG) reports.
- Analysis: It marks the shift of green electricity consumption from “voluntary disclosure” to “standardized disclosure”, forcing enterprises to improve the transparency of green electricity use through the capital market, and promoting the expansion of GEC procurement demand.
- Requirement #3: Improve the price formation mechanism of GEC, strengthen the monitoring of GEC pricing, explore the establishment of a GEC price index, and guide the price to operate at a reasonable level. With reference to the individual trading price of green certificates, the price of GEC in green electricity trading should be rationally formed.
- Analysis: In the response to journalists, National Energy Administration has mentioned that due to the imbalance between supply and demand, the price of GEC is continually decreasing, and the environmental value of green electricity in the market is highly underrated. This requirement indicates that the government will strengthen the monitoring of GEC pricing, establish a GEC price index, and regulate the pricing of GEC. It is estimated that the price of GEC will gradually rise and return to a reasonable range in the future. RESET is planning to release a white paper analyzing the price trend of green electricity in the near future. Please stay tuned for our updates.
- Requirement #4: Both power generators and consumers are encouraged to sign a medium-term or long-term purchase agreement for GEC, as well as promote the construction of multi-year, annual, and monthly green trading mechanisms, and encourage producers and users to sign multi-year purchase agreements.
- Analysis: GEC and Green Electricity Trading will shift from short-term transactions to medium-term and long-term transactions. Medium-term and long-term agreements can ensure the relationship between supply and demand, and reduce the interference of short-term price fluctuations, which will be beneficial for both parties.
Action Suggestions
With the new policy, improved pricing mechanisms, the promotion of long-term agreements and other measures, it marks a significant milestone for China’s GEC market singally it has reached a stage of standardization driven by supply and demand. The environmental and economical attributes of GEC will be realised at an accelerated pace.
The year of 2025 will be the golden opportunity for companies to procure renewable energy. We suggest that companies should take immediate action.
- Lock in the cost in advance: The current price of GEC is still low. It is recommended to complete the annual procurement plan as soon as possible to avoid the risk of rising prices.
- Establish medium-to-long-term trading arrangements: Signing multi-year agreements for GEC and green electricity procurement will help stabilize supply costs and avoid the risk of market price fluctuations.
RESET can support your organization optimize its procurement strategy. We offer advisory services to support with the full process, from group purchasing of GEC to portfolio management and helpdesk support. Contact our team to embark on your decarbonization journey.