Track the "green certificate" of waste incineration, and add 4 more trading projects to the shelves

Four more waste incineration projects have been successfully obtained and put on the shelves.

On January 19, 2024, Green Power Changzhou successfully obtained the green certificate and successfully listed it on the China Green Power Certificate Trading Platform, becoming the first enterprise in the domestic waste-to-energy industry to obtain the green certificate and put it on the shelf. (For related reports, see China Environment APP Sankei Channel "The First Green Certificate in the Domestic Waste-to-energy Industry Is Listed on the Shelf, Who Owns the Proceeds?")

As of mid-to-late February, in just one month, at least five waste-to-energy projects have successfully obtained green certificates and been put on the shelves, namely: Green Power Changzhou Wujin District Domestic Waste Incineration Power Generation Project, Sanfeng Environment Shaoxing Circular Ecological Industrial Park Biomass Power Generation Project, CECEP Hangzhou Green Energy Municipal Domestic Waste Incineration Power Generation Project, Haichuang Green Energy Meitan County Domestic Waste Incineration Power Generation Project, and Wangneng Environment South Taihu Phase I Domestic Waste Incineration Power Generation Project.

What factors do waste-to-energy companies consider when developing green assets?

Green certificate is the abbreviation of green power certificate, which is essentially the "ID card" of green power and the only certificate for domestic consumption of green electricity. Each green certificate represents one megawatt-hour (1,000 kWh) of green power generation. The generation or trading of each green certificate means that 1,000 kWh of renewable energy green electricity has been connected to the grid or consumed. Green certificate trading can not only provide a new way for waste-to-energy projects to develop green assets, but also meet the carbon emission reduction needs of other enterprises.

A relevant person in charge of a waste-to-energy incineration company told reporters that the price of a green certificate is one of the important factors that waste-to-energy companies consider when developing green assets. For example, in terms of green certificates, if a single ton of garbage develops 350 kWh of on-grid electricity, and the carbon emission factor is used to calculate the emission reduction effect, it will reduce about 0.199 tons of carbon dioxide per ton of garbage, and in CCER, the emission reduction effect can be calculated by a methodology, and according to the level of historical experience, a single ton of waste can reduce carbon dioxide emissions by 0.25 tons. Combined with the market price, opportunity cost (the development of green certificates needs to deduct state subsidies), etc., the net income can be calculated and compared, so as to choose which green asset to develop.

At present, most of the green certificates traded on China's green power certificate trading platform are sold for 30 yuan, while the price of green certificates for a large number of wind power, photovoltaic power generation and hydropower generation on the platform is less than 30 yuan. The selling price of the 30MW biopower generation project in a single county with a high turnover of green certificates is 25 yuan per unit, but the sales volume is only 106 units. It can be seen that it is still difficult for waste-to-energy projects to obtain considerable benefits from green certificate trading.

Although the price of 30 yuan is relatively high in the field of green certificates, there is still a gap compared with the national subsidy. Since a green certificate corresponds to 1,000 kilowatt-hours of electricity, the income of a green certificate for one kilowatt-hour of electricity is 0.03 yuan.

The benchmark electricity price for waste-to-energy incineration is 0.65 yuan/kWh, which consists of three parts: the local coal-fired benchmark electricity price, the provincial fixed subsidy and the central financial subsidy. Among them, the provincial fixed subsidy is 0.1 yuan/kWh, and the benchmark electricity price of coal-fired electricity varies in different places, resulting in different levels of central financial subsidy intensity for each project. Taking Jiangsu Province as an example, its benchmark coal-fired electricity price in 2020 is 0.391 yuan/kWh, and the central government subsidy intensity for waste-to-energy projects is 0.159 yuan/kWh, which is much higher than the income per kilowatt-hour brought by the development of green certificates.

Since the development of green certificates requires the deduction of state subsidies, enterprises will fully consider when choosing.

In addition, the relevant person in charge of the above-mentioned power generation company told reporters that if the green certificate and CCER are effectively connected in the future, based on the current methodology, CCER will have a greater emission reduction effect than the green certificate, and the price of the green certificate (equivalent to the carbon price per ton) < the CCER price < the carbon quota price will be judged.

Can green certificates offset carbon tariffs, and how can they be connected to the domestic carbon market?

In November 2023, at the summit dialogue session of the 15th Forum on Environment and Development, Xu Yingming, director of the Green Economic and Trade Cooperation Research Center of the Academy of International Trade and Economic Cooperation of the Ministry of Commerce, clearly pointed out that the EU does not recognize green certificates, but only green power purchase agreements.

In view of the domestic carbon market, a relevant person in charge of a waste-to-energy incineration company told reporters that green certificates and carbon emission rights have dual attributes and cannot be double-counted. Green electricity and green certificates can be used to offset Scope 2 emissions (Scope 2 refers to indirect emissions, which refers to greenhouse gas emissions generated by purchased energy, including electricity, heat, steam and air conditioning), while CCER can cover Scope 1, 2 and 3 emissions. At present, the relevant policies on how to connect green certificates and CCER have not yet been released. Some places are already being explored. For example, Shenzhen has issued a notice to include the carbon dioxide emission reductions corresponding to green power in the certified emission reductions, which will be used to offset the part of the carbon emissions of key emitting enterprises that are insufficient to meet the agreement.