Once a niche and voluntary system, China's Green Electricity Certificates (GECs) have rapidly evolved into a vital tool for the country's clean energy transition. In just over a year, GECs have transformed from low-value tokens into essential instruments for businesses navigating new regulatory pressures. Now, with prices soaring and policies tightening, GECs are at the heart of China's green energy future.
From Margins to Mainstream
Introduced in 2017, GECs were designed to certify the generation of renewable electricity—each representing one megawatt-hour (MWh). Originally voluntary, they offered renewable energy producers a supplemental income source. However, the market remained sluggish for years. Companies often chose International Renewable Energy Certificates (I-RECs) for international credibility, and wind or solar producers preferred state subsidies over selling GECs at low prices.
All that changed in 2023, when the Chinese government declared GECs the sole official proof of renewable electricity use. By 2024, they had become central to national policy, with a clear push toward full integration into electricity and carbon markets.
Policy Sparks Price Surge
In early 2025, a series of policy shifts set the GEC market alight. A major catalyst came from Guangdong province, which linked local officials' performance evaluations to corporate green electricity purchases. This gave firms strong incentives to buy GECs to remain in political and regulatory good graces.
Soon after, national authorities followed suit. A policy issued by five key government agencies—including the National Development and Reform Commission—mandated that energy-intensive industries begin purchasing GECs to align their renewable electricity usage with national targets. By 2030, affected sectors like steel, chemicals, and data centers must ensure at least 35% of their electricity comes from renewables.
These announcements created a rush of demand. GEC prices rose sharply—from CNY 1.2 in late March to CNY 2.31 by April, a 63% month-on-month jump, according to the National Energy Administration.
Supply Gaps and Regional Disparities
Despite booming demand, supply is struggling to keep pace. In 2024, China generated 3.46 trillion kilowatt-hours of renewable power, but GECs only accounted for 13.7% of that output. Many producers still don't bother issuing certificates, and transmission challenges complicate delivery to high-demand regions.
Northern provinces like Inner Mongolia and Gansu have abundant wind and solar, but limited infrastructure to transport electricity to the industrialized coast. As a result, regional GEC prices diverge widely. In early 2024, prices in the northwest hovered below CNY 3—well under the national average of CNY 9.6—due to oversupply and low local demand.
Southern China, supported by better grid connections through China Southern Power Grid, has seen more active cross-provincial GEC trading. In 2024, 30% of GEC trades in the south were cross-regional, compared to far lower rates in the north.
A Massive Market in the Making
China's intent is to build a transparent, market-based system where GECs are traded as tangible representations of environmental value. Regulatory confusion about how to track environmental attributes—by carbon emissions avoided or renewable energy produced—has largely been resolved. As of 2025, all renewable electricity must be traded through formal markets, with GECs as the standard proof.
The numbers are huge. Based on 2023 data, the steel, nonferrous metals, and chemicals sectors alone would require roughly 900 million GECs annually. BloombergNEF predicts that by 2035, data centers could need 320 million GECs per year. Combined, that's 1.22 billion GECs annually—more than a quarter of the 4.73 billion issued in 2024.
At prices of CNY 5–8 per certificate, this translates into a future market worth CNY 6–9.7 billion (USD $850 million to $1.4 billion) annually.
Going Global
China's GEC influence now extends beyond its borders. In 2024, the country overtook global leaders to become the world's largest market for renewable certificates, trading 446 billion kilowatt-hours.
I-REC officially exited the Chinese market in March 2025, leaving GECs as the sole renewable electricity credential. This forces exporters and multinational companies in China to rely on domestic certification to meet overseas sustainability and compliance standards—particularly under the EU's carbon border tax mechanism.
International recognition of GECs is growing. Southeast Asia and EU nations are beginning to accept them, and projects like the China-Laos Railway now mandate GEC-backed renewable electricity for operations. The Guangzhou Power Exchange Centre is also developing international trading frameworks, where GECs will play a central role.
Market Volatility Ahead?
While the long-term outlook is bright, short-term volatility remains likely. 2024-issued GECs, which expire at the end of 2025, are already seeing price declines as sellers try to offload them before expiration. Meanwhile, the lack of finalized regulations for enforcement, regional quotas, and market access has created some hesitation among traders and buyers.
Analysts expect a more stable market by 2027, once compulsory GEC purchasing becomes widespread and the supply-demand balance improves. After that, attention may shift to financial derivatives, such as futures or bundled green energy contracts, using GECs as the underlying asset.
Looking Ahead
In the coming years, China's green electricity landscape will increasingly incorporate advanced technologies like blockchain, virtual power plants, and AI-powered grid optimization. These tools could transform how GECs are issued, verified, and traded, making the market more transparent and efficient.
Virtual power plants—software platforms that manage distributed energy assets like rooftop solar or electric vehicles as one coordinated unit—will play a growing role. Integrating these systems with GEC issuance will require careful standardization, data governance, and regulatory oversight.
China's Green Electricity Certificates are no longer an afterthought—they're now a central mechanism in the country's clean energy playbook. As prices rise, policies tighten, and international use expands, GECs are poised to reshape both domestic and global green electricity markets. If managed well, they could be one of the most powerful tools China wields in the global fight against climate change.