Hubei power generators that miss impending renewable energy requirements must buy allowances from the province’s carbon market to compensate for their excess emissions, the municipal government said.

The statement was made by the Hubei Development and Reform Commission (DRC) to explain how the province will deal with a new law expected to set mandatory minimum renewable energy generation requirements for each province.

The final version of the regulation has not yet been published by the central government but its release is imminent, the China Business Journal reported Monday.

“Companies that fail to complete construction of the required amount of new energy projects will have to buy carbon permits to cover for the equivalent CO2,” the Hubei DRC said Tuesday.

Hubei Emission Allowances (HBEAs) closed on Tuesday at 25.72 yuan ($4.15).

The Hubei DRC also said it would develop a market for renewable energy certificates, and urged the Hubei subsidiary of the State Grid to ensure the province meets its targets.

As the final version of the new rule is not yet clear, it remains unclear exactly what requirements it will impose.

But China Business News said Inner Mongolia, Jilin, Heilongjiang, Liaoning, Gansu, Xinjiang and Ningxia would be required to generate 10% of their electricity from renewable sources.

Beijing, Tianjin, Hebei, Shanxi, Tibet and Qinghai will be given targets of 7%, while the remaining regions will have goals of either 4% or 2%, the paper said.

Those that miss their targets risk losing government funding or face possible rejection of new fossil fuel projects, it added.

The Beijing government on Tuesday said it planned to limit coal consumption in 2015 to 15 million tonnes, 8 million fewer than in 2012, which would bring its renewables generation share up to 6%.

Beijing is also considering introducing a renewable energy certificate system, similar to the REC markets seen in other countries.

By Stian Reklev – stian@carbon-pulse.com