China aims to boost renewable energy with 'green certificates'

Workers install solar panels on the rooftop of a company in Shangrao, Jiangxi province, China, October 11, 2015. REUTERS/Stringer

BEIJING (Reuters) - China plans to set up a market for renewable energy certificates to try to increase the use of cleaner energy as the world’s largest greenhouse gas producer tries to reduce its reliance on coal.

Power suppliers will be able to trade “green certificates” that represent the proportion of non-hydro renewable energy that they generate, the country’s National Energy Administration said on Thursday in a statement on its website.

China aims to increase the use of non-fossil fuel in the primary energy mix to 15 percent by 2020 from the current 12 percent. It plans to boost the share of renewables such as wind and solar power, with the goal of cutting emissions of major pollutants in the power sector 60 percent by 2020. China already has the world’s largest capacity of photovoltaic solar power.

But the government’s efforts to promote a switch to cleaner energy has been hindered because power generated from fossil fuels is cheaper and is therefore given priority on the power transmission grid.

In the statement, the energy regulator also set provincial and regional targets for the proportion of non-hydro renewable energy in use in 2020. They ranged between 5 and 13 percent, with Beijing’s target set at 10 percent.

“Power companies can trade the certificates to meet their targets for the proportion of non-hydro renewable energy. Certificate holders are encouraged to participate in carbon-emission-reduction trading and energy-saving trading,” the statement said.

The NEA did not say when a trading platform would be built, but it did say that power companies should generate at least 9 percent of their electricity from non-hydro renewable sources by 2020.

China is going to set a national cap-and-trade carbon market in 2017, allowing the trade of carbon credits earned from renewable energy projects to help emitters comply their obligations.

Reporting By Kathy Chen and Adam Rose. Editing by Jane Merriman