Design and evaluation of a conversion mechanism between green electricity certificates and CCER under the renewable portfolio standard

To enhance the coordination among electricity, carbon and environmental asset markets, we propose a conversion mechanism between green electricity certificates (GEC) and China Certified Emission Reductions (CCER). The mechanism introduces a dynamic threshold that enables energy-intensive enterprises to convert surplus GECs into CCER with diminishing marginal efficiency, creating a value linkage between green electricity consumption and carbon reduction. A Nash equilibrium game model for the power supply chain is developed to evaluate the performance of the proposed hybrid mechanism and the existed renewable portfolio standard (RPS). The research results indicate that the conversion mechanism can significantly enhance the value of GEC, raising both GEC prices and wholesale electricity prices, and promoting renewable electricity generation. Higher conversion efficiency helps delay the green certificate market from entering a saturated state and enhances the stability and adaptability of the mechanism. The interaction between the RPS quota ratio and CCER price exhibits nonlinear effects: GEC prices and tariffs increase with higher CCER prices, but follow an inverted “U”-shaped curve as the quota ratio increases. From the welfare perspective, when the RPS quota ratio is low, the mechanism increases welfare by enabling cross-market coordination and boosting renewable penetration. However, under high RPS quota levels, market capacity constraints reduce welfare compared to the RPS-only policy. The findings suggest the importance of dynamic quota thresholds, integrated market coordination frameworks, and tiered policy interventions to support efficient and adaptive renewable energy transitions.