Argus, a leading global energy and commodity price reporting agency, launched the world’s first international renewable energy certificate (I-REC) prices for China on Thursday. It helped get a trend on the renewable power premiums for the world’s largest certificate issuer and electricity production base.
“Expanding our I-REC coverage to include China, the world’s largest market, introduces essential new pricing transparency that enables energy producers and buyers to use independent price references to index supply agreements, manage risk, and plan energy sales and procurements. This new insight plays an important role in driving the transition by helping to identify the source and the cost of decarbonization efforts,” Argus chairman and chief executive Adrian Binks said.
These international RECs allow energy suppliers and consumers to label the source of their procured energy as the global economy moves towards broader electrification. They can be traded as bundled products, together with power itself, or as detached certificates. Buying certified energy helps consumers — often utilities, corporates, manufacturers and industrials — achieve their net zero targets under various carbon disclosure mechanisms.
Argus’ extension of its I-REC pricing offering to China coincides with the launch of the first local I-REC issuing body in China, after similar developments in Brazil and Turkey drove sharp increases in liquidity in those markets.
China is the largest global I-REC market, accounting for nearly 45pc of the global certificate supply and almost one-third of global demand last year. Chinese I-REC demand surpassed 30TWh in 2022, up by around 50pc from 2021, and has significant growth potential given the size of China’s power consumption, which was 8,640TWh in 2022, according to government data.
I-REC Standard Foundation executive director Jared Braslawsky said, “We are pleased to see Argus support the maturing of an internationally recognised market for I-RECs. With the introduction of CSG Carbon Asset Management as the local issuer we are, as in every jurisdiction, working towards robust and reliable implementation with the relevant local stakeholders and national recognition. Looking towards the future with renewable hydrogen and carbon border mechanisms now being discussed and introduced in the EU, UK, and the US among others, it is more important than ever that we work towards a standardised and internationally accepted mechanism of tracking the origin of power used in these products.”