China releases two sets of draft measures on national carbon trading

On November 2, 2020, China’s Ministry of Ecology and Environment released the Management Measures on National Carbon Trading (trial implementation; draft for comments) and Management Measures on Registration, Transactions and Settlement of National Carbon Emission Allowances (trial implementation; draft for comments) to seek public comments. The comment period for the former ends on December 1, 2020 and for the latter ended on November 11, 2020. Here is an overview of these measures.

Legal status

The Management Measures on National Carbon Trading (trial implementation) will be enacted on a trial basis for a certain period of time as ministerial regulations (equivalent to a Japanese ministerial ordinance). It is expected that the Provisional Regulations on Carbon Trading Management will replace the measures as administrative regulations after some provisions are added to them.

The Management Measures on Registration, Transactions and Settlement of National Carbon Emission Allowances (trial implementation) will serve as documentation of standards under the Management Measures on National Carbon Trading (trial implementation).

Scope

Management Measures on National Carbon Trading (trial implementation)
These measures apply to the management and supervision of the processes taking place in the national carbon market, including trading of emission allowances and other things, reporting and verification of emissions, allocation and payment of emission allowances, etc.

Management Measures on Registration, Transactions and Settlement of National Carbon Emission Allowances (trial implementation)
These measures apply to the management and supervision of registration, transactions and settlement of national carbon emission allowances.

Key points

Management Measures on National Carbon Trading (trial implementation)
“Key emitters” are defined as “companies and other economic entities that operate in any industry covered by the National Carbon Trading Market and emit greenhouse gases equivalent to 26,000 tons or more of CO₂ per year”. The emphasis is on the responsibilities of companies, such as for the authenticity, completeness and accuracy of emissions reporting. An offsetting framework is provided that allows key emitters to offset five percent or less of verified emissions using China Certified Emission Reductions (CCERs) or other measurements separately published by the Ministry of Ecology and Environment. More thorough supervision, inspections and corporate information disclosure, including emissions reporting, are implemented.

Management Measures on Registration, Transactions and Settlement of National Carbon Emission allowances (trial implementation)
These measures set out the basic requirements for each steps of the registration, transaction and settlement process of national carbon emission allowances. The measures specify what the Ministry of Ecology and Environment manages and supervises as well as what measures the ministry takes for this purpose.

The full text of the draft measures can be viewed at this link (in Simplified Chinese):
http://www.mee.gov.cn/xxgk2018/xxgk/xxgk06/202011/t20201102_805822.html