SunSirs: China Non-Fossil Energy Power Consumption Accounting Guidelines Launched

The "Guidelines for the Calculation of Non-Fossil Energy Power Consumption (Trial)", jointly issued by five departments including the National Development and Reform Commission and the National Energy Administration, was officially published on the Internet on June 1. This is the first unified calculation rule for non-fossil energy power consumption in China, which will impact the energy market and enterprises. Experts were interviewed by journalists on related issues.

The "15th Five-Year Plan" Outline proposes to comprehensively implement a dual-control system for total carbon emissions and intensity. Improve the carbon emission statistical accounting system and dynamic monitoring and early warning mechanism, and regularly compile the national greenhouse gas inventory.

"The transition from 'dual control of energy consumption' to 'dual control of carbon emission quantity and intensity' is a key institutional innovation for China to achieve its carbon peaking and carbon neutrality goals," said Zhang Nan, deputy director of the New Energy Trading Department of the Beijing Electric Power Trading Center.

To implement the dual control requirements for carbon emissions, in April this year, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council issued the "Comprehensive Assessment and Evaluation Method for Carbon Peak and Carbon Neutrality", establishing a comprehensive assessment and evaluation index system of "5 control indicators + 9 supporting indicators" for carbon peak and carbon neutrality. Among them, "the proportion of non-fossil energy consumption" is one of the 5 control indicators.

The guide is the basic system for the above comprehensive evaluation and assessment method, and the dual control of carbon emission.

"Carbon accounting is a foundational task for strengthening the foundation and core competencies. The related documents have high professionalism and complex application scenarios, serving as the basis for supporting the dual control of carbon emissions during the '15th Five-Year Plan' and the '16th Five-Year Plan'. Only by solidifying the foundation of carbon accounting can we ensure the steady and long-term progress of subsequent work," said Liu Jintao, Deputy Director of the Green Power Development Center at the Guangzhou Power Trading Center.

According to relevant responsible persons from the National Energy Administration, at present, 95% of the non-fossil energy consumption in China is electricity, and the accounting work of non-fossil energy electricity consumption is facing problems such as the lack of unified accounting rules, the lack of coverage of accounting objects, and the need to strengthen the mutual connection of different policy mechanisms.

"Recently, the accounting of non-fossil energy power consumption at the provincial level in China has mainly focused on the electric power energy transaction, and there is a lack of unified accounting methods for non-fossil energy power consumption at the municipal level and power users, and green power and green certificates have not been effectively connected with the carbon emission accounting system." JIN Yanming, a researcher at the State Grid Energy Research Institute, further explained that at present, local governments still face difficulties such as inconsistent data and statistical accounting methods when calculating the target value of non-fossil energy power consumption.

To this end, the guide, based on the basic principles of overall planning, orderly progress, and scientific rationality, makes specific provisions on the recognition methods and accounting methods for non-fossil energy power consumption:

——Classify the attribution of non-fossil energy power consumption per kilowatt-hour. The guide clarifies three recognition methods: one is physical recognition, including non-fossil energy power self-consumption, green power direct connection and other new business models, self-consumption of power; non-fossil energy power generation projects production consumption, etc.; the second is transaction recognition, including non-fossil energy power participating in power energy transactions, green certificate transactions, etc.; the third is allocation recognition, mainly for non-fossil energy power that has not participated in physical recognition and transaction recognition. In order to ensure the integrity of the calculation, it is included in the inter-provincial allocation and intra-provincial allocation.

——Define the accounting method for non-fossil energy electricity consumption. The guidebook specifies the accounting methods for non-fossil energy electricity consumption at the provincial, prefectural, and electricity user levels. Specifically, the non-fossil energy electricity consumption in provincial administrative regions is calculated based on the generated electricity from non-fossil energy power generation projects within the province, the recognized amount of inter-provincial transactions, and the shared amount of inter-provincial transactions. The non-fossil energy electricity consumption in prefectural administrative regions is calculated based on the physical recognition, transaction recognition, and provincial sharing amount of all electricity users within the region, as well as the physical recognition amount of non-fossil energy power generation projects. The non-fossil energy electricity consumption of electricity users is calculated based on their own physical recognition, transaction recognition, and provincial sharing amount.

——Set the limit of transaction recognition. The guide clearly sets the limit of transaction recognition in combination with the inter-provincial and intra-provincial electricity energy transactions, and the electricity consumption of power users going online. On the provincial level, the amount of transaction recognition in each province should not exceed the scale of all received (transmitted) electricity after deducting the transaction electricity of supporting fossil energy power generation projects of inter-provincial and inter-regional transmission channels. On the city level, the amount of transaction recognition in each city should not exceed the total electricity consumption of all power users going online in that city. The amount of transaction recognition of power users should not exceed their total electricity consumption going online.

Zhang Yiguo, Vice President of the Hydropower and Water Conservancy Planning and Design Institute of the Ministry of Water Resources, believes that the guidebook clarifies the feasible path for including green power certificates in carbon emissions accounting, with provincial accounting based on electricity energy trading and accounting at the municipal and power user levels based on green power certificates and green power trading. This approach neither subverts the current statistical methods for non-fossil energy power consumption nor significantly affects the existing pattern of indirect carbon emissions from inter-provincial power transmission, while encouraging users to consume green power as much as possible by purchasing green power certificates. Through the design of a rigorous accounting rule, it promotes the effective connection and coordinated development of various policy mechanisms such as the power market, green power certificate trading, and carbon emissions accounting.

"The guide conditionally recognized the application of green certificates in the accounting of non-fossil energy power consumption, indirectly laying the foundation for the application of green certificates in the accounting of indirect carbon emissions from electricity at different levels and the carbon footprint of products, expanding the application scenarios of green electricity and green certificates, and is conducive to stimulating the demand for green electricity and green certificates from power users, promoting the continuous improvement of the green electricity and green certificate market, and new energy entities that are not included in the mechanism will be able to obtain additional benefits by selling green certificates." said Jin Yanming, adding that the physical identification method proposed by the guide will also further promote the development of new business models such as direct connection of green electricity and self-consumption.

Zhang Nan noted that the guide embodies a clear progressive feature in the design of the rules. The basis for the determination is the electricity quantity transaction, which gradually changes to the parallelism of the electricity quantity transaction and the green certificate transaction; the current time accuracy is calculated by the year, and the follow-up research explores the possibility of shortening the calculation period, the core purpose of which is to improve the level of management of non-fossil energy consumption. This progressive arrangement has reserved a window for strategic adjustment for market entities, and it has also clarified the long-term direction of gradually improving the accuracy of tracing and gradually tightening the system.

The relevant responsible person of the National Energy Administration said that in the next step, the National Development and Reform Commission and the National Energy Administration will establish a calculation work mechanism, clarify the work process, time nodes and responsible units. Recently, the focus is on promoting the relevant parties to accelerate the improvement of the functions of the green certificate issuance and trading system to support all levels to carry out the calculation of non-fossil energy power consumption.

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