Addressing barriers to large-scale corporate renewable energy procurement in China March 2022 Acknowledgements The Carbon Trust would like to thank everyone that has contributed their time, insights and expertise during the preparation and completion of this report. Special thanks go to Mr Conor Gask and Ms Ma Chongxi, whose input was invaluable in completing this project and report. We would also like to express our sincere gratitude to the UK Foreign, Commonwealth & Development Office (FCDO) for its financial support. For the avoidance of doubt, the views expressed in this report do not necessarily reflect the views of the UK FCDO or the individuals and their organisations mentioned. Contents 1. Executive summary ........................................................................................................ 4 2. Introduction ..................................................................................................................... 5 Project context ........................................................................................................... 5 Corporate interest in RE procurement ..................................................................... 5 Report structure ......................................................................................................... 6 3. Corporate RE procurement landscape in China ........................................................... 6 Available options for corporate RE procurement .................................................... 6 Policies for renewable energy development ...........................................................10 Estimation of demand size .......................................................................................14 Barriers to corporate RE procurement ....................................................................17 4. Corporate RE procurement landscape in the UK ........................................................ 21 Current available options for corporate RE procurement ......................................21 Key enablement policies ..........................................................................................26 Key policy impacts....................................................................................................29 5. Recommendations for supporting corporate RE procurement in China .................. 30 6. List of references .......................................................................................................... 34 1. Executive summary To achieve its climate commitments for 2030 and 2060, China will continue to increase its deployment of renewable energy. The rapidly growing interest and demand for renewable electricity procurement from corporates will be a significant driver for the investment and deployment of renewable energy. With the support of the UK Foreign, Commonwealth & Development Office (FCDO), this report aims to identify the barriers and provide recommendations to scale-up renewable energy procurement in China. With the support of a series of policies including Feed-in-Tariffs (FiTs), renewable energy development in China has substantially increased in past decades, while the costs have reduced significantly, entering a subsidy-free era. Since the launch of the green electricity trade pilot program in September 2021, direct green electricity transactions have accelerated. Following this, authorities have released several supporting policies, such as the trial transaction rules in the southern region which clarify the detailed rules, and the Implementation Plan for Promoting Green Consumption which proposes to further mobilise demand of green electricity consumption. Currently, China’s main renewable energy procurement options are direct Power Purchase Agreements (PPAs) and unbundled Energy Attribute Certificates (EACs). Key barriers include the lack of clear market rules in some regions, limited accessibility especially for inter-provincial procurement and the risk of double counting renewable attributes in different market systems. The UK experience provides some highlevel insights on renewable energy development, such as the importance of driving down renewable energy costs to be more competitive through R&D support and market-pull policies. To promote and accelerate renewable energy procurement in China, actions need to be taken to overcome the current barriers and unlock the potential for renewable electricity procurement.