## 2 Interaction Between TGC and CET in China  
Currently, China has vigorously promoted the coordinated application of TGC and CET policies, which affects the operation mode of renewable energy enterprises and traditional thermal power enterprises, thus accelerating the transformation and upgrading of the energy industry toward the green and low-carbon direction [22]. TGC is based on renewable energy generation and is issued by the government or third-party organizations. In China, every 1000 KWh of clean energy electricity produced corresponds to one TGC [32]. Electric power companies or social electricity users can fulfill their clean energy consumption obligations by purchasing TGC. In the market, the TGC price is determined by supply and demand. Its main function is to enhance the economy of clean energy generation, promote the marketization of clean energy, and reduce dependence on government financial subsidies [33]. CET gradually reduces enterprises' total carbon emissions through a combination of quota allocation and market trading [34]. The government allocates specific carbon emission quotas to enterprises based on industry benchmarks or historical emissions. Enterprises can reduce emissions through technological improvements or purchase carbon emission quotas through the market. TGC and CET convey signals of clean energy development and carbon reduction pressure to power companies from different perspectives. Although their goals and targets have their own focuses, their scope of action intersects. Under the incentive of TGC, renewable energy generation enterprises increase investment in renewable energy generation equipment or purchase a certain amount of TGC, thereby promoting the utilization of renewable energy and promoting the sustainable development of the electricity market [27]. CET forces power production enterprises to improve energy efficiency and processes or invest in low-carbon technologies by making their carbon emission costs explicit to achieve emission reduction targets [35]. The interactive relationship between these two mechanisms is shown in Figure 1. On the one hand, TGC has promoted the development of clean energy generation technology by incentivizing the production of green electricity [36]. On the other hand, CET has put forward precise emission reduction requirements for power generation enterprises, reducing the carbon emissions of traditional power generation enterprises [37]. Both have jointly promoted the sustainable development of the electricity market, but inconsistent market performance may also lead to competition and disharmony. When the TGC price is high, companies invest in renewable energy generation projects to fulfill their consumption obligations [38]. However, when the TGC price is too low, companies are more willing to rely on the CET market to reduce compliance costs by reducing carbon emissions, which decreases market demand for TGC and weakens its incentive effect [39]. When the CET market price is high, companies will promote applying low-carbon technologies to reduce carbon emissions and increase their attention to renewable energy power technology [40; 41]. When the CET market price is low, companies prioritize relying on CET to fulfill their obligations, reduce investment in renewable energy power technologies, and ignore the market demand for TGC [42]. The CET market is closely related to the TGC market, and companies need to flexibly adjust their strategies based on the price signals of the two policies to balance costs and policy requirements. The interaction of TGC and CET provides enterprises with diversified emission reduction methods, which helps to achieve overall emission reduction goals and enhance market adaptability and sustainability. However, power production enterprises must choose between two policies due to limited funds and resources.