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On June 8, 2022, China’s Ministry of Ecology and Environment (MEE) issued the Notice on the Adjustment of the Key Tasks Related to the Management of Corporate Greenhouse Gas Emission Report in 2022 (hereinafter referred to as the Notice).
Experts of REACH24H Consulting Group offered detailed interpretation on the major amendments to facilitate relevant companies on carbon emission compliance:
Extending the deadline for the verification of carbon emission of key emitting entities in the power generation industry in 2021
It was originally scheduled to complete the verification of the 2021 annual emission report of key emitting entities in the power generation industry and publish the list of 2022 key emitting entities before June 30, 2022. Considering the impact of Covid, there will be an inevitable delay in completing these tasks, as expected until the end of September 2022.
Interpretation from REACH24H:
Local competent departments will determine the final carbon emission quota based on the verification results. If it is inconsistent with the pre-allocated quota, the final approved quota shall prevail, and the difference shall be subtracted or added through the registration system.
The delay of verification means companies have less time to trade carbon emission quota according to the final approved quota and actual carbon emission. Thus, companies need to understand the quota allocation rules to formulate quota trading strategies in advance.
Adjusting the value of carbon emission parameter of key emitting entities in the power generation industry
For key emitting entities in the power generation industry in 2021 and 2022: if the annual measured month of elemental carbon content is less than 3 months, the carbon content per unit calorific value of coal in missing months will be the default value. The default value is adjusted from 0.03356 tC/GJ to 0.03085 tC/GJ regardless of coal type.
Interpretation from REACH24H:
According to the Guidelines for Accounting Methods and Reporting of Greenhouse Gas Emission for Enterprises - Power Generation Facilities (hereinafter referred to as the Guidelines), the calculation formula of greenhouse gas generated by enterprises using fossil fuels is:
FCi is the consumption of i-th fuel, OFi is the carbon oxidation rate of i-th fuel, and 44/12 is the ratio of the relative molecular mass of carbon dioxide to carbon;
Car,i is the elemental carbon content on an as-received basis of the i-th fossil fuel, the unit is tC/t or tC/104m3. For fossil fuel without or failed the carbon testing, Car,i is calculated by the following formula:
CCi is the carbon content per unit calorific value of the i-th fuel, and the unit is tc/GJ. NCVar,i is the low calorific value on an as-received basis of the i-th fuel.
E.g:
A power plant used 1 million tons of coal in 2021, assuming that the low calorific value (NCVar,i) of the coal is 24.52 GJ/t.
According to the original provisions of the Guidelines, the carbon content per unit calorific value of coal is 0.03356 tC/GJ, then the greenhouse gas generated by coal combustion is:
1000000×0.03356×24.52×0.99×44/12=2987095 (t)
If the carbon content per unit calorific value is 0.03085 tC/GJ as specified in the Notice, the greenhouse gas generated by coal combustion is:
1000000×0.03085×24.52×0.99×44/12=2745884 (t)
It can be seen from above results that due to the decrease in the carbon content per unit calorific value, the greenhouse gas generated by coal combustion in the plant reduced by 241,211 tons, which enables the plant to cut the cost of carbon quota or sell the surplus carbon quota for more income.
Cracking down on data fraud
Strengthening the daily supervision of carbon emission data. For the key emitting entities that have been found making false or concealing elemental carbon content data, the unit calorific value of coal shall still be 0.03356 tC/GJ during the process of problem dealing and rectification.
Interpretation from REACH24H:
Enterprises need to conduct carbon accounting in a standardized manner to ensure the authenticity and reliability of the data so as to lay a good foundation for future carbon market development.
At the beginning of this year, the MEE published typical cases of irregular carbon emission report data, and urged local environment departments to further investigate and deal with illegal acts such as data misrepresentation, concealment, and fraud.
The Chinese analysis can be accessed here.
