China has started a renewable electricity pilot trading plan to enable carbon dioxide emitters to partially offset their footprint by purchasing green power directly from generators, with the blockchain technology expected to be used.
The effort, which will provide financial assistance to generators, is a component of Beijing’s plan to mobilize large greenhouse gas polluters to help the country meet its dual climate targets of achieving net-zero emissions by 2060 and peaking carbon emissions by 2030.
In addition to the leading power distributors China Southern Power Grid and State Grid Corporation of China, the project would be overseen by National Development and Reform Commission (NDRC). Following the introduction of a national trading mechanism for carbon emission licenses in Shanghai, the plan calls for establishing a trading center in Beijing and another in Guangzhou.
“Because of the intermittent nature of solar and wind power generation, absorbing more green electricity would result in increased operating expenses for the power distribution system,” the commission stated on Tuesday. “Through direct trade, customers who are prepared to take on more social responsibility can adopt a market-based mechanism to depict the environmental worth of green power better and fiscally support its producers.”
Many businesses have already expressed an interest in paying more for their power supply as part of its social responsibility, and some local governments have already prepared to allow such trading, according to the NDRC. Policymakers are convinced that such an arrangement will be welcomed since research shows that many businesses have already expressed an interest in paying more for their energy as part of part of its social responsibility. On the technical front, NDRC noted that blockchain technology – irreversible files of electronically recorded data – may be used to track renewable energy output, trade, and consumption. State Grid has applied for patents on the blockchain-enabled trading system.
Because the government is driving the initiative, international corporations in China will prefer it because a method will be built to validate the power’s “green” attribute and guarantee that this is only sold once, according to Lucas Zhang Liutong, who is the director of the WaterRock Energy Economics firm. If properly implemented, it will remove a major roadblock – lack of multi-year power deals – allowing for even quicker development in wind and solar power consumption.
According to Sinolink Securities analyst Niu Bo, the trading scheme could reach a scale of 20 billion to about 30 billion kilowatt-hours (kWh) next year, going to rise to about 100 billion kWh if European Union (EU) goes ahead with an initiative to impose a carbon tax on imports, prompting more carbon-intensive Chinese companies to purchase more green power. According to Li Ting, managing director of the non-profit Rocky Mountain Institute’s Beijing office, China’s yearly demand for green power might exceed 1.44 trillion kWh in 2050.