Text/Yangcheng Evening News all-media reporter Liu Kehong
Picture/Xinhua News Agency data map
Recently, the “Interim Regulations on the Management of Carbon Emissions Trading” (hereinafter referred to as the “Regulations”) were promulgated. This is my country’s first specialized regulation in the field of addressing climate change. It clarifies the carbon emissions market trading system in the form of administrative regulations for the first time. Landmark.
So, what exactly is the carbon market? What tools does China’s carbon market system consist of? What’s the difference between these tools?
China’s carbon market consists of two markets: mandatory and voluntary.
In fact, China’s carbon market is composed of the national carbon emissions trading market (mandatory carbon market) and the national voluntary greenhouse gas emission reduction trading market (voluntary carbon market). The mandatory and voluntary carbon markets have their own focus and operate independently. , are complementary and interconnected, and together constitute the national carbon market system.
The construction of my country’s carbon market started with local pilot projects. Since 2011, the country has designated 7 provinces and cities including Beijing, Tianjin, Shanghai, Chongqing, Hubei, Guangdong, and Shenzhen to carry out carbon emissions trading pilots, and has successively launched transactions covering more than 20 industries such as electricity, steel, and cement. Nearly 3,000 companies.
my country’s national greenhouse gas voluntary emission reduction trading market (CCER system) began construction in 2012, entered the trading stage in 2015, and suspended issuance in 2017. However, after the issuance is suspended, the existing CCERs can still be traded in the local carbon market. Until January 22 this year, the national greenhouse gas voluntary emission reduction trading market was officially launched. On the first day, the transaction volume reached 375,315 tons and the transaction value was 23,835,280 yuan.
Why are the two tools related and complementary to each other? According to Article 29 of the “Carbon Emissions Trading Management Measures” issued by the Ministry of Ecology and Environment in January 2021, key emission units can use state-certified voluntary emission reductions to offset the payment of carbon emission quotas every year, and the offset ratio shall not be Exceeding 5% of the carbon emission quota payable. Relevant regulations will be formulated separately by the Ministry of Ecology and Environment. This allows CCER to become the “regulatory pool” of the carbon trading market, and achieve the result of regulating the carbon market by setting the access conditions for voluntary emission reduction projects.
What are the differences between the two carbon markets? Why is the voluntary emission reduction trading market valued?
Regarding the difference between the two market tools, the carbon emissions trading market is mandatory, while the voluntary emission reduction trading market is voluntary. The participants in the carbon emissions trading market are currently mainly emission companies with legal obligations to control greenhouse gas emissions, which are the key emission units mentioned in the “Regulations”. The government allocates carbon emission quotas to these companies, and requires companies to clear their emissions to the government. After paying the amount of allowances equal to their actual emissions, companies with surplus allowances can profit from selling them in the market. Enterprises with insufficient quotas need to purchase them from the market, thereby achieving policy guidance that encourages the advanced and restrains the backward, and reduces the cost of carbon reduction for the entire industry and even society as a whole.
The purpose of the voluntary emission reduction trading market is to encourage various entities to voluntarily and voluntarily take additional actions to reduce greenhouse gas emissions. After the emission reduction effects are quantified and verified through scientific methods, they are sold through the market to obtain corresponding emission reduction contribution benefits. . Voluntary emission reduction projects need to meet three conditions: first, additionality, second, authenticity, and third, uniqueness.
At the State Council’s regular policy briefing on February 26, Zhao Yingmin, Vice Minister of the Ministry of Ecology and Environment, emphasized the additionality of the voluntary emission reduction trading market—this is reflected in the fact that tradable emission reductions must be generated by human activities. And it is an extra effort to reduce emissions. For example, virgin forests and oceans themselves absorb carbon dioxide and have carbon sinks. However, such carbon sinks are not produced by additional human efforts, so they cannot be developed as products for voluntary emission reduction projects. In addition, projects that have reached the market average profit level do not have additionality.
At the same time, some of my country’s current renewable energy investments have already achieved commercial profits, and the emission reductions generated for the purpose of profit-seeking by market capital are non-additional. Therefore, when it is not commercially feasible, or is below the carbon emission reduction baseline of the same industry, revenue must be obtained through the voluntary emission reduction market in order for the project to operate effectively and achieve the emission reduction target. This reflects its of additionality.
In October 2023, the Ministry of Ecology and Environment issued the “Measures for the Administration of Voluntary Emission Reduction Trading of Greenhouse Gases (Trial)”, which stipulates all aspects of voluntary emission reduction trading and related activities. Subsequently, the Ministry of Ecology and Environment released the first batch of CCER methodologies, which were for afforestation carbon sinks, grid-connected solar thermal power generation, grid-connected offshore wind power generation and mangrove creation.
Zhao Yingmin introduced that the voluntary emission reduction trading market follows the principle of first easy and then difficult. The four first published methodologies all have good additionality, such as offshore wind power, or to be precise, deep sea grid-connected power generation. The cost of offshore wind power is higher than that of onshore wind power. In order to encourage offshore wind power, the methodology clearly states that offshore grid-connected power generation is the first batch of methodology. At the same time, due to the current technology, it is still difficult to recover commercial costs for photothermal grid-connected power generation. Therefore, photovoltaic power generation is also encouraged by the state, including forest carbon sinks and mangrove creation, which all follow this logic. Therefore, additionality is very important.
At the same time, another characteristic of the voluntary emission reduction trading market is that it must comply with the principle of conservatism when accounting. The calculation of how much greenhouse gases a project has reduced or absorbed is sometimes not so certain, or there is a range when selecting parameters. According to regulations, it is necessary to ensure that the calculated carbon emission reductions are not overestimated. If there is a range, it is to comply with this conservative principle.
Zhao Yingmin also mentioned that at present, China’s carbon emissions are mainly concentrated in key industries such as power generation, steel, building materials, nonferrous metals, petrochemicals, chemicals, papermaking, and aviation. These eight industries account for about 75% of our country’s carbon dioxide emissions. In addition to the power industry, although the other seven industries are currently not included in quota control, the verification of their carbon emission accounting reports has been carried out. The Ministry of Ecology and Environment is actively promoting and striving to realize the first expansion of my country’s carbon emissions trading market as soon as possible.
“We will adhere to the principle of mature one and integrate into one, fully learn from and make good use of existing carbon emission management systems and experiences, strengthen the system construction and data management of carbon emission management for industries to be included, so that key emission units in these industries can be integrated into carbon emission management systems.” After the market is established, it can meet the management requirements of the carbon market.” Zhao Yingmin said.
Editor: Yang Haoxian
2024-02-26 08:53:56
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