In a significant development, the State Council of China has given its approval for a comprehensive framework of regulations aimed at standardizing the country’s emissions trading systems. The impending “Interim Regulations on the Management of Carbon Emissions Trading” is expected to be officially published soon, with a focus on several key aspects to streamline and enhance the effectiveness of China’s carbon market.
One of the primary areas the regulations are likely to address is the definition of the scale of the national carbon market. This entails establishing clear parameters and boundaries for the market, providing a foundational framework for the trading of carbon emissions allowances. Additionally, the regulations are expected to identify “key emission companies,” recognizing entities that play a crucial role in the carbon emissions landscape.
Allocation of emissions allowances is another pivotal aspect covered in the regulations, aiming to establish a fair and transparent system for distributing emission quotas among participating entities. The Ministry of Ecology and Environment has emphasized the importance of data quality supervision, ensuring the accuracy and reliability of information in the carbon trading process. The regulations are also expected to provide guidance on trading operations to streamline and regulate the market activities effectively.
According to reports from Securities Daily, the national carbon market, inaugurated in 2021, encompasses approximately 4.5 billion tonnes of CO2 emissions annually, exclusively from the power sector. This makes it the largest carbon market globally, as reported by The Beijing News. Despite this milestone, concerns have been raised regarding the lack of unified laws, regulations, and policy systems in China’s regional carbon markets, necessitating standardization and greater transparency, as highlighted by China Energy Network.
The draft of the Interim Regulations, which is currently open for public consultation, outlines a crucial provision suggesting that no additional regional markets should be established once the regulations come into effect. Furthermore, it proposes the gradual integration of existing regional markets into the national market. However, the official approval status of this provision remains unclear.
Zhou Di, an expert on technology and standards, stressed the current challenges facing China’s carbon markets, citing fewer participants, insufficient legal frameworks, and a lack of flexibility in trading mechanisms compared to mature carbon markets worldwide. He anticipates that the Interim Regulations will address these issues by providing clear principles and management requirements for carbon emissions trading, reinforcing market supervision, and placing a strong emphasis on information openness and transparency. The implementation of these regulations is poised to play a pivotal role in shaping the future trajectory of China’s efforts to mitigate carbon emissions and contribute to global environmental sustainability.
