Ministry of Ecology and Environment (MEE) Released Updated Draft Ordinance of Chinese Carbon Emission Trading

On March 30, 2021, the MEE released an updated draft of the national emissions trading system (ETS) Ordinance for public comments by April 30, 2021. Compared with the existing “Administrative Measure for National ETS (Trial)” issued by MEE, the Ordinance will be approved and released by the State Council and have higher legal effectiveness.

The updated draft stated the ETS is now one of the policy measures to achieve the climate goals of carbon peaking and carbon neutrality. Compared with the first draft released in April 2019, the main changes are on supervision, allowance allocation, information disclosure and risk prevention and control as well as penalties. It defined that the Ordinance will only apply for the national ETS in China. It clarified the division of supervision responsibilities between the MEE and other relevant authorities such as the State Administration for Market Regulation (ASMR), the People’s Bank of China (PBoC), China Securities Regulatory and Commission (CSRC) and China Banking and Insurance Regulatory Commission (CBIRC). A cap is to be set in the national ETS and auctioning will be introduced gradually, while the initial face will still see free allocations. Furthermore, the duties of covered enterprises are described which include an obligation to monitor and report annual GHG emissions on a yearly basis. Annual emissions covered by the companies, verification reports, compliance results as well as information on registration and trading need to be disclosed by participants. The document also lists penalties up to CNY 500,000 for non-compliance and up to CNY 10 million for violation and/or market manipulation. Once the Ordinance takes effect, no additional regional ETS shall be established and the existing ones will be gradually phased out and incorporated into the national system.

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Sino-German Project on Capacity Building for the Establishment of ETS in China

Project country
China
Political Partners
German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU); Ministry of Ecology and Environment of the People's Republic of China (MEE)
Implementation Partners
National Center for Climate Change Strategy and International Cooperation of the People's Republic of China (NCSC)
Duration
07/2012 - 03/2020

The Chinese government has set itself the goal of reaching the peak of CO2 emissions by around 2030 and reducing CO2 emissions per unit of GDP by 60 to 65% compared to 2005 levels. To achieve these targets, China is gradually establishing a national Emission Trading System (ETS) as one of the key building blocks of its mitigation strategy. Since the start of the project in 2012, the Sino-German project “Capacity Building for the Establishment of Emissions Trading Schemes (ETS) in China” has been supporting the Chinese government in this endeavour through knowledge transfer and strengthening of the political leverage of key institutions and stakeholders required to develop and operate an ETS. Initially, the project supported the development of the regional pilots ETS. Since 2016, the focus lies on support for the roll out of the national ETS. The project is jointly implemented by GIZ and the Ministry of Ecology and Environment (MEE) of the People’s Republic of China. It is executed on behalf of the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) within the framework of the International Climate Initiative (IKI) that is financing climate and biodiversity projects in developing and newly industrialising countries, as well as in countries in transition.