On 9 August 2023, the Supreme People’s Court (SPC) and the Supreme People’s Procuratorate (SPP) unveiled their joint ‘Interpretation of Several Issues Concerning the Application of Law in Handling Criminal Cases of Environmental Pollution’, due to take effect on 15 August 2023. This Interpretation, comprising 20 articles, marks the first-time carbon emission data falsification has been encompassed within criminal regulation.
In a bid to address climate change, foster green, low-carbon development, and leverage market mechanisms to regulate greenhouse gas (GHG) emissions, China initiated a carbon emissions trading market in 2021. The effective functioning of this market is integral to China’s “dual carbon” objectives. The credibility and authenticity of GHG emissions reports, along with related testing outcomes, form the backbone of this trading market and ensure its fairness and trustworthiness.
The significance of accurate carbon emission data is evident from an incident on in March 2022, when the Ministry of Ecology and Environment (MEE) revealed instances of data falsification in carbon emission reports. Such malpractices have garnered widespread attention from governmental bodies across all levels. Issues surrounding deliberate tampering or falsification of GHG emission reports and related testing by technical service organizations have emerged as a prominent concern, jeopardizing the integrity of the carbon emissions trading market.
Previously, regulatory measures addressing such falsifications were limited. Consulting organizations lacked robust managerial tools and a clear legal framework. Penalties for data falsification were primarily derived from Article 39 of the Administrative Measures for Carbon Emission Trading (for Trial Implementation). This article prescribed penalties ranging from CNY 10,000 to CNY 30,000 for entities that misrepresented or concealed their GHG emission reports. However, it failed to provide guidance on penalizing service providers involved in data fraud.
Addressing these shortcomings, the SPC and the SPP introduced the pivotal interpretation. Set to be effective from 15 August, this interpretation comprises 20 articles and categorizes ‘intentionally providing false documents during greenhouse gas emissions inspections or by intermediary organizations’ as a criminal offense. The inclusion in criminal law, with incrimination thresholds of CNY 300,000 of illegal income or loss to public or private assets, is anticipated to be a potent deterrent against data falsification and malpractice. Although there is currently no climate change law at the national level, this judicial interpretation of the criminal law has addressed clear regulatory measures on practitioners related to the environment and carbon emissions.