Guotai Haitong Securities Co., Ltd. has released a research report indicating that green certificates are transitioning from voluntarily purchased environmental attributes into compliance tools that can be monitored, accounted for, and assessed within key energy-consuming industries. The firm projects that after 2028, the green certificate market will gradually move from a state of surplus to a tighter balance, and if industry expansion accelerates or the green electricity consumption ratio in key sectors rises faster, the inflection point may arrive earlier than expected.
The core viewpoint from Guotai Haitong Securities Co., Ltd. is that the green certificate system is shifting from voluntary consumption to rigid constraints, with demand growth certainty steadily increasing. Since 2017, China's green certificate system has evolved through stages including voluntary subscription, green electricity trading, full-coverage issuance, and the development of mandatory consumption mechanisms. The No. 42 Directive, effective in 2026, further clarifies that the minimum proportion of renewable electricity consumption in key energy-consuming industries will be assessed using green certificates corresponding to electricity generated in the assessment year, with enterprises failing to meet targets required to make supplementary purchases. Green certificates are thus transforming from optional branding and carbon reduction tools into foundational credentials for key industries to fulfill their green electricity consumption responsibilities.
The core of supply analysis is not the total issuance volume but the effective supply of independent green certificates. The 2024 issuance included a significant amount of retroactive certificates for historical electricity, which does not represent normal annual supply. In 2025, a total of 2.947 billion green certificates were issued nationwide, of which 1.893 billion were tradable. After further deducting 250 million certificates transferred through green electricity trading, the effective supply of independent green certificates is approximately 1.64 billion. Considering the issuance growth from new wind and solar projects, as well as the impacts of mechanism electricity, non-tradable certificates, and the continued growth of green electricity trading, the effective supply of independent green certificates is expected to reach a peak of approximately 1.98 billion in 2029, before slightly declining to 1.96 billion in 2030.
The expansion of mandatory consumption industries constitutes the primary driver of demand growth. Current green certificate demand mainly comes from key energy-consuming industries, provincial consumption responsibility gaps, and voluntary consumption and export supply chains. Based on calculations of electricity consumption and green electricity consumption ratios in electrolytic aluminum, steel, cement, polysilicon, and data centers, the demand for independent green certificates is projected to be 910 million, 1.14 billion, 1.36 billion, 1.55 billion, and 1.77 billion units from 2026 to 2030, respectively. Among these, demand growth in 2026-2027 will be mainly driven by the convergence of key industry assessments and scope expansion, while growth after 2028 will primarily stem from continuous increases in green electricity consumption ratios.
Under the baseline scenario, supply and demand will gradually converge, with 2029-2030 potentially opening a window for price elasticity. The ratio of independent green certificate demand to effective supply is expected to rise from 0.41 in 2025 to 0.70 in 2028 and 0.90 in 2030, with the market moving from a clear surplus to a tighter balance. If the green electricity consumption ratio in key industries increases by 5 percentage points annually, the supply-demand ratio will reach 0.98 in 2030; if it increases by 8 percentage points annually, the ratio will rise to 1.07, potentially leading to supply shortages and significantly stronger upward price momentum for green certificates.
Further industry expansion may become a key catalyst for earlier price increases. The current model has not yet incorporated potential new industries such as flat glass, oil refining, ethylene, synthetic ammonia, methanol, other non-ferrous metals, lithium-ion batteries, 5G base stations, and charging infrastructure. If these industries are gradually included in green electricity consumption assessments, demand growth may significantly exceed baseline forecasts, pushing the supply-demand inflection point earlier.
Risk warnings: The expansion of key industries and improvements in green electricity consumption ratios may fall short of expectations; new energy installations and tradable green certificate supply may exceed expectations; and policies related to green certificates, green electricity, and carbon accounting may change.
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