Chinese Renewable Energy Law and Carbon Neutrality

China’s renewable energy legal framework is anchored by the Renewable Energy Law (Ke Zaisheng Nengyuan Fa, 可再生能源法), enacted in 2005 and amended in 2009. The law established feed-in tariffs, renewable portfolio standards, and green certificate trading — mechanisms that have supported China’s emergence as the world’s largest renewable energy market.

The Renewable Energy Law

The Renewable Energy Law was enacted to promote the development and utilization of renewable energy, improve the energy structure, and achieve sustainable development. The law defines renewable energy to include wind, solar, hydro, biomass, geothermal, ocean, and other non-fossil energy sources. The law establishes a legal framework for renewable energy development planning, industrial support, grid connection, price management, and economic incentives.

The 2009 amendments strengthened the law by establishing: mandatory grid connection requirements for renewable energy (Article 14); full purchase obligations for grid enterprises (Article 14); cost-sharing mechanisms for grid connection (Article 20); and a renewable energy development fund (Article 24). The amendments addressed implementation problems — particularly the failure of grid enterprises to purchase renewable electricity — that had limited the effectiveness of the original law.

Feed-In Tariffs

The feed-in tariff system was introduced in 2009 for wind power and extended to solar in 2011. Under the system, renewable energy generators receive guaranteed prices for electricity fed into the grid, with tariffs differentiated by technology type, project size, and resource quality. The feed-in tariffs provided the primary economic incentive for renewable energy investment, guaranteeing revenue certainty and enabling financing.

The feed-in tariff system was phased out for new solar projects in 2021 and for new wind projects in 2022, transitioning to a parity pricing system where renewable electricity competes directly with coal-fired electricity. The transition reflected the declining cost of renewable energy and the government’s objective to reduce subsidy burdens. Existing projects continue to receive the feed-in tariff for their guaranteed period.

Renewable Portfolio Standards (RPS)

China’s renewable portfolio standard, introduced in 2019 and implemented from 2020, requires provincial-level grid enterprises to procure a specified proportion of electricity from renewable sources. The RPS targets are set by the National Energy Administration and vary by province based on resource availability, grid capacity, and development goals.

The RPS is enforced through a green certificate trading system. Grid enterprises that fail to meet their RPS obligations may purchase green certificates (luse zhengshu) from renewable energy generators to demonstrate compliance. Green certificates are tradable on the China Green Electricity Certificate market, which has expanded since its establishment.

Green Certificate Trading

The green certificate system allows renewable energy generators to issue certificates representing the environmental value of renewable electricity generation. Each certificate represents 1 MWh of renewable electricity. Certificates may be sold to grid enterprises, electricity retailers, and end-users who wish to demonstrate renewable energy consumption.

The green certificate system has developed slowly, with low trading volumes and prices in its early years. The government has taken measures to stimulate demand, including: requiring certain entities to purchase certificates to meet RPS obligations; expanding the scope of mandatory renewable electricity consumption; and linking certificate trading with carbon markets. The system is expected to play a larger role as the feed-in tariff is phased out.

Dual Control of Energy Consumption

China’s dual control of energy consumption (nengyuan xiaofei shuang kong) policy limits both total energy consumption and energy intensity (energy consumption per unit of GDP). The policy, implemented through five-year plans, imposes binding targets on provincial governments and large energy consumers. The dual control system has been a significant driver of renewable energy deployment by limiting coal consumption and creating demand for non-fossil energy.

The dual control policy was refined in 2021 to give provinces greater flexibility in meeting targets while maintaining national objectives. The policy has been particularly effective in limiting the growth of energy-intensive industries and promoting energy efficiency improvement. The dual control system is being integrated with the carbon emissions trading system to create a unified framework for energy and climate policy.

2060 Carbon Neutrality Goal

President Xi Jinping announced at the United Nations General Assembly in September 2020 that China would achieve carbon neutrality by 2060 and peak carbon emissions by 2030. This commitment has been incorporated into national policy through the 1+N policy framework for carbon peak and carbon neutrality. The framework includes: the Guiding Opinions on Carbon Peak and Carbon Neutrality (October 2021) and the Action Plan for Carbon Peak by 2030 (October 2021).

The carbon neutrality commitment has accelerated renewable energy deployment. China has set targets of 1,200 GW of wind and solar capacity by 2030 and a 25% share of non-fossil energy in primary energy consumption by 2030. The legal framework for carbon neutrality includes: the development of a national carbon emissions trading market; the establishment of carbon accounting and verification systems; and the enactment of a dedicated climate change law, which was proposed in the 2023-2027 legislative plan.