Two problems with China's new clean power accounting rules

In June 2026, China published a trial document for determining how much clean power organisations have used.

The Guidelines on Non-Fossil Fuel Electricity Accounting provides three methods.

Physical accounting is for when the consumer generates its own green power or receives it from an off-grid power generator. Trade accounting involves the consumer showing evidence such as records of green power purchases or Green Electricity Certificates (GECs). And allocation accounting takes the green power in a province's power mix and allocates it evenly across power users.

There are two significant problems with this system.

First, the guidance contains no specific rule on proving "additionality" – that a GEC actually caused more green power to be generated. This may cause problems with GEC integrity and international trade compliance. Meanwhile, the allocation accounting method allows for the double counting of stored energy, as we will see.

The bigger risk, though, is that if this system feeds into macro-level carbon accounting, we may see company figures suggest no emissions have been incurred despite no real-world reductions.

The additionality issue

The term "additionality" is more often used to talk about carbon offsets and carbon credits. Did, for example, the purchase of offsets stop a mangrove forest from being cut down or would it have stayed standing anyway?

In the guidelines, GECs are treated as evidence of the consumption of green electricity. However, it's hard to be sure that consumption is additional. Would the solar power plant or wind farm the GEC is purchased from have been built anyway, even if GECs weren't bought?

There is already fierce debate over this internationally. Some researchers have criticised the rules of the internationally recognised Greenhouse Gas Protocol (GHGP) for claiming clean electricity consumption during accounting for those "Scope 2" emissions which arise indirectly from electricity and heat purchases.

They say that if only the purchase of certificates is used, with no reference to the time match or place of use, there will be next to no impact on real-world emissions. Other research has shown that as wind and solar generation is now profitable, it will be built regardless of the purchase trigger of certificates.

As I see it, China has three options if it wants to prove additionality.

First, renewable generation capacity in excess of enforced government targets. Every year, the central government sets a new target for renewable power generation – an extra 200 gigawatts, for example. Anything above this could be considered additional. This is easy to calculate, but the weakness is that the target is entirely determined by the government which may be incentivised to keep it low.

The second is to set a point in time after which any newly installed capacity is considered additional – a simple method to put into practice.

The third is to prove at the power plant level that without the purchase of green electricity, a project would not have gone ahead. This is the strictest standard but hardest to use, as it is impossible to prove hypotheticals. The Clean Development Mechanisms under the UN climate negotiations were criticised for the same reason.

Each method has its strengths and weaknesses, and there is no way to definitively prove additionality. The government needs to make a balanced choice and come up with a legal definition.

Allocation accounting and the double counting of energy storage

There is no way to trace electricity once it is supplied to the grid. To prove you have used green electricity, you have to rely on accounting methods and certificates. For example, a solar power plant might supply 1,000 kilowatt-hours of electricity to the grid and receive a GEC. A power consumer then buys that GEC to claim "ownership" of that power. The actual power it used may have come from somewhere else, but on the books 1,000 kilowatt-hours of green power have been generated and used.

If green power generation and GECs match up, then there has been no double counting or loss of any elements. This principle is known as "additivity".

However, one of the complications with the new guidelines is that while the physical and trade methods are additive, the allocation accounting method may not be when energy storage is a factor.

The guidelines say that the power taken in by storage facilities, such as pumped hydropower stations or battery storage plants, is to be regarded as used by a consumer and subject to the usual accounting rules to determine whether it is green. That means the same quantity of green power could be counted once as it flows into the storage facility, and then again when used by a final consumer, violating the principle of additivity. The more energy storage that is used, the worse the double counting becomes.

The allocation accounting method creates a pool of electricity "of indeterminate type", which storage facilities will fill. Each of the two stages – battery storage centres charging up and the actual end-use of that power – seem to make sense, but add them together and green power accounts will not add up.

From power accounting to carbon offsets

The guidelines say that eventually green power consumption will be linked to carbon emission accounting. Other government documents have also said that ways of using GECs in carbon emission accounting are being considered. But that will exacerbate the problem.

When calculating Scope 2 emissions a company would be able to use GECs to designate the matching quantity of electricity as zero-carbon. It would be necessary to consider whether the EU's carbon levy – the Carbon Border Adjustment Mechanism – permits this. But currently, there are failings both at the company level and with the methodology.

First, additionality issues. If a company buys GECs to "own" already existing green electricity from a hydropower plant or wind farm, rather than doing anything to create more new green electricity, it starts to look like an accounting trick. There also needs to be further discussion of how this would work in practice when consumers have direct connections to green power generators.

Second, double counting. If electricity "of indeterminate type" sold on the market is allocated out to consumers, at the same time stored electricity is being double counted, the integrity of overall environmental outcomes will suffer. This needs to be fixed at the methodology level.

Accounting suggestions

The allocation method should be discarded and the nature of energy storage – as a transporter, not a producer of power – recognised to close the double-counting loophole.

We also need to accept that scientific methods alone cannot determine additionality. Legislation and policy are needed to decide what counts. When setting those rules, a careful choice between three ways of defining additionality, presented above, will have to be made. If the rules are too lax, it becomes a numbers game. Too tight and the barriers will put companies off consuming green electricity.

The guidelines are for power consumption accounting, but what needs most attention is the next step – carbon emission accounting.

There are signs China may link GECs with carbon offsets, though the emission scope of this remains unclear. This may lead to "virtual" emissions cuts, where at the company level GECs have been used to offset carbon emissions, but at the macro level emissions have not actually reduced.

So, when calculating carbon emissions at the macro level, we need to benchmark against total actual emissions – how much fossil fuel has been burned – rather than an offsets figure on the books.

This article is also published on Dialogue Earth. illuminem Voices is a democratic space presenting the opinions of leading Sustainability Thought Leaders, their views do not necessarily represent those of illuminem.

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