China announced that Premier Li Qiang has signed new regulations for its carbon emissions trading system, including giving government ministries responsibilities for oversight and management of trading, and introducing stricter sanctions for entities that falsify. information, with the aim of providing a legal framework for the country's carbon market. and strengthen control of greenhouse gas emissions in carbon-intensive sectors.
The new regulations follow China's launch in 2021 of its national carbon emissions trading scheme (ETS) – the largest in the world – which forms part of China's strategy to achieve its national climate goals, which include achieve peak carbon dioxide emissions by 2030 and carbon neutrality by 2030. 2060.
China produces more greenhouse gases (GHGs) than any other country, with emissions more than double those of second place, the US. The ETS is one of the country's main tools aimed at achieving its climate ambitions.
Although the ETS currently focuses mainly on the energy sector, responsible for approximately 40% of the country's carbon emissions, the government is currently exploring expanding the system to other high-emissions sectors, including cement and aluminum.
Under the new rules, China's ecological environment department is responsible for supervising and managing carbon emissions trading, including helping to determine the types of emissions and industries included in the system, and formulating annual carbon emissions quotas. carbon based on national GHG emissions targets, as well as other economic, industrial and social factors.
Under China's emissions trading system, each entity covered by the ETS is allocated a fixed amount of carbon emission allowances, based on an industry benchmark for the type of energy production and site size, with entities capable to buy more licenses in the ETS if they exceed their quota or sell if they are below. Unlike most carbon trading systems that apply an absolute, and typically decreasing, emissions cap at launch, China's ETS has applied an allocation of emission allowances to companies that adjusts over time based on levels. actual production.
While allowances are currently granted free of charge, with the new regulations in place China said it will implement a system of paid and free allocations, setting the stage for reduced free allocations to help support national emissions targets through the ETS. .
The new regulation also establishes stricter penalties for non-compliance with the ETS, introducing fines of up to 2 million yuan ($281,000) for violations, including failure to calculate emissions in accordance with regulations, serious failures, omissions or falsifications. in reported emissions data, or failure to submit samples for inspection.
The new regulations will come into force from May 2024.
