Renewable Energy Quota System and Green License Program

On March 23, 2018, Chinese National Energy Administration officially set up the policy of using a renewable energy quota system in all its twenty-three provinces and four province-level municipalities. The setting up of the renewable energy quota system ensures that a certain proportion of the energy consumption in each province has to be renewable energy, whether it is powered by wind, water or solar energy by 2020. The goals for the quota are calculated and set up by national energy consumption experts.

The renewable energy quota system assessed different goals for different provinces. Sichuan province, for example, is given a goal of 91%. This means that ninety-one percent of energy used in Sichuan should come from renewable energy. Interestingly, the goals vary hugely among the provinces. Shandong is the province that has the lowest goal of all the provinces. Only 8.5% energy is required as renewable energy. This is due to the fact that Shandong is the biggest coal producer province in China. The cost of producing electricity through coal burning is the lowest among the country, which explains the relatively low level of the goal.

Apart from the overall goal on the proportion of energy that is from renewable energy in general; the second part of the quota system set up the goal that within the renewable energy section, a certain proportion of the energy has to be from renewable energy that is not water and wind generated energy. This requirement further promotes renewable energy produced by photovoltaic, from geothermal energy or through bio-generated ways.

Along with the renewable energy quota system, China released its Green Energy License. At the end of each year, the energy use for each province would be calculated. Provinces that outperformed the goal could obtained a green license that record the excess amount of energy that is produced by renewables. The amount recorded in the green license is tradable through provinces. If some provinces didn’t fulfill their goal, they could purchase them from the provinces that have the green license.

Launching the renewable quota system will definitely contribute to meeting the goals listed in IPCC. It will lower the energy emission from coal or oil burning and will gradually decarbonized the electricity sector. It also greatly promotes the use of renewable energy in China. However, there are many ways that the quota system could be improved. First, the difference in standards for different provinces is reasonable but questionable. Sichuan province for example, has the highest goal among all other provinces. This is mainly because the fact that the famous Three Georges Bay is there. This means that the goal doesn’t really tell us how much more each province is working towards renewables. A goal that’s set by how much more to improve rather than on how much it should be would be more encouraging. Second, the proposed Green License Program is questionable because it discourages some provinces from hitting the goal. Coal and oil generated energy is about ¥269 lower per kkwh compared to energy generated by renewables. For coal-producing provinces, there is a high profit margin for them to use the energy from coal to generate profits. Then, they can use part of the profit to purchase green license from other provinces. Therefore, it would be more efficient if the Program does not allow renewable energy to be traded. In this way can we really ensure that renewable energy is encouraged across China!

Activity Rating: *** Right Direction

The renewable energy quota does help provinces in China to work towards a greener energy using society. The goals set by the system are feasible for sure as they are based on the status quo of each province. It would be, however, more efficient if the goal set is based on the amount of renewable energy that is increased by each province and also that the new Green License Program does not allow for the trading of renewable energy. However, overall we can really see that, with these new programs, China is working towards a more sustainable future.

Take Action: Please send the following message to the policymaker below:

Dear National Energy Administration Policy Makers,

Hi, we are so encouraged by the set-up of renewable energy quota system in China. Please continue to work on how to better implement the policy! Thank you! However, we would like to see the quota system set more ambitious goals for cutting down on the energy that’s produced by fossil fuels. We are looking forward to seeing a greener future in China!

Contact Information:

National Energy Administration
No.38, Yuetan South Street, West city district, Beijing

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