China's Interim Regulations for the Management of Carbon Emission Trading will come into effect this May. The first special regulation providing a legal basis for the operation and management of the national carbon market and responding to climate change is significant for China which has the world’s largest carbon market in terms of the amount of greenhouse gas emissions covered, China's Ministry of Ecology and Environment (MEE) said on Monday.
Carbon trading is the process of buying and selling permits to emit carbon dioxide or other greenhouse gases, and is restricted to designated emitters who have such rights.
China’s State Council Information Office held a policy briefing in Beijing on Monday on the Interim Regulations for the Management of Carbon Emission Trading which will come into effect on May 1, 2024. It is the first dedicated legislation in China’s efforts to address climate change and a significant milestone for being the first administrative regulation to explicitly outline the carbon emission trading system.
Zhao Yingmin, vice minister of MEE, said during the briefing that the regulations focus on and make explicit provisions in multiple aspects including specifying institutional mechanisms, regulating trading activities, ensuring data quality, and penalizing illegal behaviors, offering a strong legal support for the healthy development of China’s carbon market, marking the beginning of the establishment of laws and regulations for the country’s carbon market.
The rollout of the regulations is of great significance for achieving China’s “dual carbon” goals – to peak carbon emissions by 2030 and achieve carbon neutrality by 2060 – and promoting the overall green and low-carbon transition in society.
According to Zhao, the national carbon market was launched on July 16, 2021 and has smoothly wrapped up two compliance periods. The market achieved its expected goals, covering about 5.1 billion tons of CO2 emissions, with 2,257 key emission units included, becoming the world’s largest carbon market in terms of the amount of greenhouse gas emissions covered.
According to the MEE, the national carbon market had seen its total trading volume reach 440 million tons as of the end of last year. It was estimated that the overall carbon emission reduction costs by power-generating industry reduced 35 billion yuan ($4.86 billion) over its two compliance circles.
With the continuous expansion of the carbon market covering a wider range of industries, and the optimized allocation of carbon emission resources among different sectors nationwide, the minimization of the overall cost of emission reduction nationwide will ultimately be achieved, Zhao said.
The primary purpose of the regulations is to provide a legal basis for the operation and management of the national carbon market, Zhang Yaobo, director general of the Fourth Bureau of Legislation of the Ministry of Justice, noted during the Monday briefing.
Zhang pointed out that there exist problems such as carbon emission falsification at present which should be addressed by legislation.
According to Zhang, the authenticity of carbon emission data is crucial and essential to effectively implement carbon market policies and for the healthy operation of the market. The regulations focus on the effective prevention and punishment of carbon emission data falsification as a crucial aspect and makes great efforts in improving institutions and mechanisms in terms of stressing the primary responsibility of key emission units, strengthening the supervision of technical service organizations, intensifying inspections, and increasing the severity of penalties.
According to Zhang, those who falsify or fabricate data and information will face fines ranging from more than five times to less than 10 times their illegal gains, or face up to a 1-million-yuan fine if they obtain no illegal gains or obtain illegal gains less than 200,000 yuan.
In some serious circumstances, the violators shall be prohibited from engaging in relevant business.
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