A new modeling study argues that cross-border green electricity trade could give China’s renminbi a distinct route to wider international use, one anchored not in oil or sovereign debt markets but in renewable power, carbon-reduction benefits and digital clearing infrastructure. The paper, published in the open-access journal Carbon Neutral Systems, introduces the concept of a “green value anchor” and maps a progressive pathway for renminbi internationalization that runs from trade settlement through financial circulation to institutional trust.
The research team, led by Liangchao Huang, Qichen Wang and Michael Z. Hou with colleagues at institutions in China and Germany, frames its work against a long-running asymmetry in global energy finance. Oil and gas trade has been dominated by dollar-denominated pricing and clearing arrangements that reinforce what the authors call a “petroleum-dollar-U.S. Treasury” cycle. Since the renminbi entered the International Monetary Fund’s Special Drawing Rights basket in 2015, its international use has grown in trade settlement, investment and reserves, yet it remains concentrated in goods trade, with limited shares in services trade, financial investment and reserve assets.
The study’s central analytical claim is that the anchoring role of energy in monetary systems does not depend on specific energy types but on the systemic indispensability of energy itself. As long as economic activity and technological infrastructure remain energy-dependent, energy functions as a foundational value anchor regardless of whether it takes fossil or renewable form. The authors point to long-term structural shifts: since 1950, the share of oil and coal in primary energy consumption has steadily declined while renewables have risen, and the dollar’s share of global reserve currencies has fallen from 71 percent in the 1990s to 56.32 percent in 2025.
Why green electricity rather than oil or gas? The authors argue that renewable resources are geographically more diversified than fossil fuels, reducing the geopolitical sensitivity of energy trade and weakening the historical linkage between currency dominance and fossil-energy power. Electricity is also a continuously delivered commodity whose volume and environmental attributes can be monitored and verified in real time, making it traceable and auditable in ways that fossil fuel cargoes are not. Digital settlement rails strengthen this case: the digital renminbi recorded its first cross-border crude oil settlement through the Shanghai Petroleum and Natural Gas Exchange in 2023, and the Cross-Border Interbank Payment System, or CIPS, continues to expand its participant coverage with real-time or near real-time clearing.
To quantify the potential, the team built three development scenarios for Yunnan province’s cross-border green electricity exports to Southeast and South Asia through 2060. Yunnan borders Vietnam, Laos and Myanmar and holds theoretical hydropower reserves of 103 million kilowatts, about 22 percent of China’s national total and the largest of any provincial-level region. In 2023, clean energy accounted for over 85 percent of the province’s total power generation, with hydropower contributing roughly 70 percent and wind and solar combined about 15 percent.
The scenarios diverge sharply. In the conservative case, trade volume grows slowly and reaches roughly 200 billion kilowatt-hours by 2060, with average annual exports of about 42.1 billion kilowatt-hours and average annual revenue near 17 billion yuan. The reference scenario, which follows current plans such as the China–Laos 500 kV line and the China–Myanmar 230 kV line, lifts average annual exports to about 342.1 billion kilowatt-hours with revenues approaching 140 billion yuan. The ambitious scenario, which assumes demand in neighboring countries rising 10 percent or more annually and new ultra-high-voltage lines reaching Thailand and the Indian subcontinent, pushes average annual exports to approximately 1.56 trillion kilowatt-hours and revenues to about 630 billion yuan, with 2060 volume nearing 7.5 trillion kilowatt-hours.
Applying an assumed electricity price of 0.40 yuan per kilowatt-hour and scenario-specific assumptions about the renminbi settlement share and the proportion of renminbi retained after settlement, the model projects that renminbi settlement in Yunnan’s green electricity trade could reach about 2.7 trillion yuan by 2060 under the ambitious scenario, with retained capital exceeding 1.35 trillion yuan. The reference scenario yields roughly 240 billion yuan in settlement and about 96 billion yuan in retained capital. The authors note that 2.7 trillion yuan equals approximately 2.8 percent of the annual settlement volume currently processed through CIPS, around 17 percent of China’s total foreign trade settled in renminbi, and roughly 0.02 to 0.03 percent of annual settlement volume handled through SWIFT worldwide.
Extending the same assumptions to a national multi-corridor network spanning Southwest, Northwest and Northeast China, the study projects annual renminbi settlement of approximately 8.1 to 13.5 trillion yuan, with capital retention of 4.0 to 6.8 trillion yuan, equivalent to 8 to 14 percent of current annual CIPS clearing volume. The authors treat these figures as a conservative lower bound because the broader green-energy export market is far larger: in 2023, China’s electricity exports totaled about 1.65 billion dollars, while photovoltaic product exports reached 48.48 billion dollars and lithium-ion battery exports 48.6 billion dollars, with overall green energy-related exports exceeding 100 billion dollars, roughly 70 to 100 times the value of electricity exports. The study does not apply that multiplier directly to its projections, acknowledging that not all green energy exports can be settled in renminbi and that equipment trade differs financially from energy trade.
The paper positions the green value anchor as a third logic of currency internationalization, distinct from both the fossil-energy-based petrodollar system and the euro-centered carbon market model, in which euro-priced carbon instruments under the EU Emissions Trading System, whose auction revenues exceeded 43 billion euros in 2023, have strengthened the euro’s role in green finance. The authors also stress limits: international trust in the renminbi is not fully consolidated, capital account openness and market depth still lag behind the dollar and euro, and standard convergence on carbon accounting and green bond certification remains limited. They explicitly state the study does not examine currency substitution or replacement, and does not argue the renminbi will replace the dollar in global energy markets.
The mechanism the authors describe is deliberately gradual. Trade creates authentic usage scenarios for the currency; financial markets retain and recycle renminbi funds through green bonds, carbon assets and infrastructure instruments; and institutional arrangements foster long-term confidence, culminating in reserve adoption when central banks or sovereign wealth funds in importing countries begin holding renminbi-denominated green assets. Because China’s external economic structure and capital account conditions differ from those that sustained the petrodollar, the authors characterize renminbi-based financial circulation as likely to be gradual, partial and context-specific rather than systemic and global. The projections are model-based forecasts under stated assumptions, not observations of current flows, and the study reports that no datasets were generated or analyzed during the research. Within those limits, the work offers a quantified, scenario-bounded sketch of how renewable energy trade might reshape the functional reach of a currency in a multipolar monetary order.
Subject of Research: Modeling the role of green energy trade in renminbi internationalization
Article Title: From the petrodollar to the green energy RMB: green energy–driven mechanisms and pathways for Renminbi internationalization
Article References: Huang, L., Wang, Q., Hou, M. Z., Zhang, T., Zhang, S., Shi, T., Guo, Y., & Beck, H.-P. (2026). From the petrodollar to the green energy RMB: green energy–driven mechanisms and pathways for Renminbi internationalization. Carbon Neutral Systems, 2(1), Article 1. https://doi.org/10.1007/s44438-026-00022-6
Image Credits: AI Generated
DOI: 10.1007/s44438-026-00022-6
Keywords: renminbi internationalization, green electricity trade, green value anchor, petrodollar system, Yunnan power exports, CIPS, digital yuan, carbon market, energy finance, currency reserves, Southeast Asia, scenario forecasting
Tags: carbon marketCIPScurrency reservesdigital yuanenergy financegreen electricity tradegreen value anchorpetrodollar systemrenminbi internationalizationscenario forecastingSoutheast AsiaYunnan power exports
