New regulations will be available in the carbon trading market

along with"Carbon emissionsThe approval of the Interim Regulations on the Management of Rights Trading (Draft) is generally believed in the industry that the legal basis for the management of carbon emission rights trading in my country will be clearer and will be expanded in the future.Carbon marketScale and increase my country's international carbon discourse power.

On January 5, the State Council Executive Meeting reviewed and passed the "Interim Regulations on the Management of Carbon Emission Trading (Draft)" (hereinafter referred to as the "Regulations"). From the launch of pilot carbon emission rights trading in many places in 2011, to the official launch of the national carbon emission rights trading market in 2021, my country's carbon emission rights trading market has become the world's largest carbon market covering greenhouse gas emissions. Against the backdrop of policy opening and market pilot projects, my country's carbon emission trading market has achieved outstanding results in recent years, but at the same time, there have been phenomena such as unclear legal concepts and relatively low market activity. With the passage of the Regulations, the industry generally believes that the legal basis for my country's carbon emission rights trading management will be clearer, which will help expand the scale of the carbon market and increase my country's international carbon discourse power in the future.

Carbon TradingMarket rights and responsibilities are clearer

my country's carbon emission rights trading originated more than ten years ago. In 2011, seven provinces and cities in Beijing, Tianjin, Shanghai, Chongqing, Guangdong, Hubei and Shenzhen launched local pilot work. Since 2013, pilot carbon markets in various provinces and cities have begun to be traded online one after another. As my country's carbon market starts to take the lead and the transaction scale continues to expand, relevant management measures and legislation on carbon emission trading management are also being brewed.

In 2019, the Ministry of Ecology and Environment drafted the "Interim Regulations on the Management of Carbon Emissions Trading (Draft for Comments)" and solicited public opinions for the first time, marking the beginning of my country's carbon emissions trading legislation. At the end of 2020, the Ministry of Ecology and Environment issued the "Regulations on Carbon Emission Trading (Trial)", which provided policy guidance for my country's carbon trading market. In 2021, the Ministry of Ecology and Environment drafted the "Interim Regulations on the Management of Carbon Emissions Trading (Draft Revised)" and once again solicited public opinions.

"The passage of the Regulations means that the top-level design legislation for my country's carbon emission rights trading management is about to be released, and it is expected to have three positive impacts on my country's carbon trading market." Chen Zhen, founder of Sunshine Times Law Firm, said in an interview with China Energy News, "First, it will help accelerate the construction of a unified national carbon market, demonstrating the country's determination to promote green and low-carbon development; second, coordinate the work of various ministries and commissions from the national level, and promote the orderly development of the carbon market through information sharing and cooperation; third, there is a clearer definition of the rights and responsibilities in carbon emission rights trading, and constrain the participating entities of the carbon emission rights trading market with clearer and stricter legal responsibilities, strengthen the accountability mechanism, increase the cost of violations, and also has stronger constraints on key emission units and technical service institutions."

In the view of Zhang Wenqi, a researcher at the China Sustainable Transformation Center of the World Resources Research Institute, the promulgation of the Regulations will help build a binding system at the national level, laying the foundation for the inclusion of more industries into the national carbon market, and helping to connect with relevant policies of the "dual carbon" goal.

Helping low-carbon green development

As of 2024, my country's carbon trading market has been operating stably for more than two years. Although the scale of carbon trading continues to increase, in the industry's view, the carbon trading market still faces many realistic challenges.

"The national carbon emission trading market, which was launched in 2021, is currently only included in the thermal power generation industry. Although its absolute emissions are already considerable, its coverage is still relatively narrow, excluding high-energy-consuming and high-emission energy-consuming industries such as steel, cement, and petrochemicals. At the same time, the total constraints in the early stages of the operation of the national carbon market are relatively loose, and the incentive effect on enterprises to reduce carbon by more than 100% is limited." Zhang Wenqiu said in an interview with a reporter from China Energy News.

Wang Weiquan, Secretary-General of the Energy and Environment Professional Committee of the China Energy Research Association, also admitted to reporters that compared with the European carbon trading market, my country's carbon price level is still relatively low and the trading activity is relatively low. I believe that with the introduction of top-level design legislation, it will further promote trading activity, and at the same time allow the carbon trading market to play the role of price discovery, which will truly promote greenhouse gas emission reduction.

In the industry's view, the passage of the Regulations will bring new impetus to the future green energy transformation and the healthy development of the carbon financial market.

"The continuous development and growth of the carbon market will firstly put greater pressure on high-emission enterprises, promote enterprises to improve energy utilization efficiency, and achieve energy conservation and emission reduction. Secondly, it will accelerate the development and utilization of non-fossil energy, promote the development of renewable energy such as wind power, photovoltaics, and biomass, promote more consumers to use green energy, help the construction of my country's new power system, and ultimately promote my country's energy transformation in all aspects." Wang Weiquan said.

Chen Zhen also pointed out that the passage of the Regulations will also stimulate the orderly development of carbon finance and related businesses. "The promotion of carbon emission trading management legislation will make market supervision clearer and more transparent, and will help promote the healthy and orderly development of the market. With the clarity of the legal positioning of carbon assets and the carbon market, carbon financial business can also gain greater room for development."

It will help enhance my country's international carbon discourse power

Many industry experts said that the implementation of the Regulations will not only promote the healthy and orderly development of my country's carbon trading market, but will also help promote mutual recognition of domestic and foreign standards and enhance my country's international carbon discourse power.

"In recent years, my country's photovoltaics, new energy vehicles and other industries have accelerated their outbound overseas, but France, South Korea and other countries have put forward higher requirements for the carbon footprint of photovoltaic products, and the EU's new battery law also stipulates the carbon footprint of batteries. The promulgation of the "Regulations" will more effectively promote my country's carbon statistical accounting to connect with the international community, prompting Chinese enterprises to increase their energy conservation and emission reduction efforts, and improve the international competitiveness of my country's products." Wang Weiquan pointed out.

Chen Zhen further stated that legislation related to carbon emission trading puts higher requirements for carbon data quality management, which will greatly improve the international credibility of China's carbon data and have a good role in promoting enterprises to improve their international competitiveness. At the same time, legislation provides enterprises with a more legal market environment, making emission reductions in various industries more orderly and lawful.

In Zhang Wenqi's view, for industries and key emission units included in the national carbon market, the "Regulations" provide enterprises with the basis and motivation to carry out carbon asset management. Compared with the voluntary emission reduction market, the mandatory national carbon market will help enhance the awareness of key industries and enterprises in carbon verification, information disclosure and other aspects, and gradually strengthen the capacity building that complies with international carbon standards.

Regarding the future docking of domestic and foreign carbon market standards, Zhang Wenqiu added that relevant departments need to implement top-level design based on the Regulations, coordinate various functional institutions, and further optimize accounting methods. "For example, how the national carbon market connects and coordinates with the green electricity and green certificate markets to avoid repeated calculations is not only related to the domestic market, but also an important means to enhance China's international carbon discourse power."