Review of pricing mechanisms and external cost allocation in the green power trading system

Green power trading has emerged as a critical institutional innovation to align decarbonization goals with market efficiency in the global energy transition. First, this paper examines international pricing frameworks, contrasting the US voluntary renewable energy certificates (REC) markets and the EU’s mandatory guarantees of origin (GO) certification system to identify mechanisms balancing economic viability and environmental accountability. Second, focusing on China’s heterogeneous load centers, it deciphers regional innovations: Beijing’s cross-regional coordination expands green certificate liquidity, Shanghai’s hybrid interprovincial trading optimizes channel utilization, Zhejiang’s distributed aggregation unlocks decentralized resource value, and Guangdong’s dual-track pricing bridges spot markets with policy constraints. Finally, the paper proposes a tripartite pathway to internalize external costsdynamic green certificate anchoring, cross-regional premium compensation, and carbon-linked subsidy reforms-to mitigate spatial asymmetries between resource-rich and demand-centric regions. These insights advance a scalable framework for harmonizing pricing efficiency with equitable cost allocation, offering pivotal strategies for China’s unified green power market amid diverse regional endowments.