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The greenhouse gas emissions spewed out by fossil fuel burning, forest destruction and other human activities have caused the climate crisis, the IPCC (Intergovernmental Panel on Climate Change) special report shows. To cope with climate change, China has pledged to peak carbon dioxide emissions by 2030 and achieve carbon neutrality by 2060. On July 16, 2021, China, as the world’s largest emitter of greenhouse gases, has officially launched the national carbon emission trading market (hereinafter referred to as ‘Market’), which is a landmark in China’s efforts to go green (ChemLinked news).
So far, the Market only includes a total of 2,162 key power generation enterprises covering approximately 4.5 billion tons of carbon emissions, making it the world's largest carbon market. Li Gao, director-general of the Department of Climate Change at the Chinese Ministry of Ecology and Environment (MEE), addressed that the power generation industry was just a breakthrough point to lead in launching the carbon emission trading. For chemical industry, carbon trading is currently only piloted in some provinces and cities, which will be included in the Market during the 14th Five-Year period (2021-2025) as well as other industries, e.g. building materials industry, non-ferrous industry, and steel industry, etc.
Speaking at the CRAC-HCF 2021 held by REACH24H on December 7, 2021, Mr. Dunkai Liu, from Jiangxi Carbon Emission Trading Center, introduced the legal framework of China’s national carbon emission management and corresponding obligations of chemical industrial enterprises.
Legal Framework of Carbon Emission Management
Based on the experience from the pilot project on carbon emission trading in Beijing, Tianjin, Shanghai and other six provinces and cities since 2011, legislation is a prerequisite for regulating carbon emissions. Only a comprehensive legal system can provide a basis for follow-up management. The legal framework for the national carbon emission trading has a three-level structure. Details are as follows:
Superordinate law titled Provisional Administrative Rules on Carbon Emission Trading (Revised Draft) [1], a draft version released by the MEE on March 30, 2021, which may be officially published by China State Council by the end of 2021, stated by Mr. Liu.
Secondary rule titled Measures for the Administration of Carbon Emission Trading (Trail) [2], which took effect on February 1, 2021. Before the superordinate law is promulgated, the trial measures are considered to be the de facto legislative framework for operating the carbon emission trading.
Technical guidelines including Guidelines on Enterprises Greenhouse Gas Emissions Accounting and Reporting-Power Generation Facilities (Draft) [3], Administrative Rules of Carbon Emissions Registration (Trail) [4], Administrative Rules of Carbon Emissions Trading (Trail) [5], Administrative Rules of Carbon Emissions Settlement (Trail) [6], etc., clarifying matters relating to the trading methods, account opening system and other matters relevant to the national trading of carbon emissions.
Besides, the MEE is the prime competent authority for regulating carbon emissions in China, with three supporting systems including the national registry system set in Hubei province, the trading system set in Shanghai city, and the data reporting system that is subordinate to the national pollutant emissions permit system.
What shall be done?
According to Mr. Liu, so far not all chemical enterprises across China are engaged in the carbon emission trading, except for those in the foregoing pilot provinces and cities. However, the whole chemical industry is inevitable to be included in the Market in the coming future. For chemical enterprises, it’s better to make clear what shall be done and get ready for the new obligations. Chemical enterprises in pilot provinces and cities are mainly obligated to do the following:
Fill in the greenhouse gas emission report
Fill in the emission monitoring plan
Submit relevant reports via the data reporting system
Cooperate with verification agencies appointed by the government to conduct on-site verification
Verify the government-issued carbon emission allowances are the same as the emissions reported
Buy/sell the carbon emission allowances and complete the compliance performance
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