The annual "unhanging" case of the carbon circle is revealed: what do six experts think about the restart of CCER? Focus analysis

 Text | 36 Carbon Editorial Department

On the evening of October 19, all the "carbon circle people" were swiped by a blockbuster news:

The Administrative Measures for Voluntary Greenhouse Gas Emission Reduction Trading (for Trial Implementation) (hereinafter referred to as the "Administrative Measures") were officially issued by the Ministry of Ecology and Environment and the State Administration for Market Regulation.

This means that the biggest "suspense" of the carbon circle in 2023 will be revealed-CCER was officially restarted。

CCER (China Certified Emission Reduction), that is, China's certified voluntary emission reduction, is a trading product of the national greenhouse gas voluntary emission reduction trading market.

CCER can be regarded as a "carbon" exchange, for example, a afforestation carbon sink enterprise that meets the requirements can not only use afforestation projects to reduce carbon, but also obtain certificates of trading emission reductions in the market, so that "carbon" can be turned into real money that can be circulated.

As an important supplement to the national carbon emission trading market, CCER can mobilize the enthusiasm of industries and enterprises covered by the national carbon market to reduce emissions, give play to the flexible mechanism of the market, and attract more enterprises to actively reduce emissions. On the other hand, it can also bring additional financial support to carbon emission reduction projects that meet the standards and promote the development of emerging low-carbon industries.

It has been more than six years since the suspension of the acceptance of voluntary emission reduction trading project applications in March 2017, and the existing CCER in the market can no longer meet the needs of the national carbon emission trading market.

Since the beginning of this year, the call for CCER restart has become louder and louder. The Ministry of Ecology and Environment has also repeatedly stated in press conferences that it is expected to fully restart CCER by the end of this year, and issued the Administrative Measures for Voluntary Greenhouse Gas Emission Reduction Trading (Trial) (Draft for Comments) in July, which means that the restart of CCER continues to accelerate.

On October 19, the Administrative Measures were officially released, and CCER was officially restarted. So what signals does the new version of the Administrative Measures release, and what impact will it have on the entire industry?

To this end, 36 Carbon invited industry experts from Tianjin Emission Rights Exchange, Fresh Capital, Ruisi Carbon Management, Climate Future, Carbon Barrier, and Zhongjian Carbon Management Consulting Company to give you the first time to focus on it!

36 Carbon: After the release of the new version of the Administrative Measures, what is the focus of the industry's attention and discussion at the first time?

Yuchen Hu, partner of Fresh Capital：CCER was officially restarted，首先大家会关注新规的内容变化。与此前发布的征求意见稿相比，项目开工建设时间要求、减排量产生的时间要求、已备案项目的管理方式等方面有所调整，其他内容没有明显变化。大家还非常关注首批项目方法学，这涉及到首批交易的品种，目前还未全面公开。

Wang Jun, founder of Climate Future and author of "The Era of Carbon Neutrality": CCER has finally made substantial progress, and the most discussed is the content change, and when the new methodology will be released, when the application will be officially launched, etc., of course, the abolition of the old methodology is also one of the key points of discussion.

The official draft clarifies the timing of the project declaration, clearly stating that "project owners can apply for project emission reduction registration in installments." The emission reductions of each project for registration shall be generated within five years before the date of the application for registration. This means that the emission reductions generated by the project must be registered within five years, otherwise they will be invalidated, that is, at least once every five years.

Zhao Manguo, senior expert of the trading business department of Tianjin Emissions Exchange: Highlights include the following:

1) Project timeframe: Include the project start time and the time when the emission reduction is generated, because these two points are the key conditions for determining the shortlisting of future projects and affecting the emission reduction.

2) Project type requirements: The management measures only specify that "voluntary greenhouse gas emission reduction projects should be conducive to carbon reduction and increase sinks, and can avoid or reduce greenhouse gas emissions, or achieve greenhouse gas removal", and do not announce the specific project type, which needs to be determined in accordance with the published methodology in the future.

3) Scope of market participants: The Administrative Measures stipulate that "legal persons, other organizations and natural persons that comply with the relevant provisions of the State may participate in voluntary greenhouse gas emission reduction trading in accordance with these Measures", clarifying that individuals may participate in market transactions.

4) How to deal with historical recorded projects and emission reductions: The Administrative Measures stipulate that "voluntary greenhouse gas emission reduction projects that have been recorded by the national climate change authority before March 14, 2017 shall re-apply for project registration in accordance with the provisions of these Measures; emission reductions that have already been filed can continue to be used in accordance with relevant national regulations".

36 Carbon: Determining the project methodology is key to CCER. The "Management Measures" puts forward "in line with the project methodology issued by the Ministry of Ecology and Environment", how to understand the specific meaning and impact of this content?

Zhao Manguo, senior expert of the trading business department of Tianjin Emissions Exchange: As the name implies, all projects applying for registration must be carried out in accordance with the methodology published by the Ministry of Ecology and Environment, which indirectly clarifies that the methodology previously filed by the NDRC is not accepted.

Wang Jun, founder of Climate Future and author of "The Era of Carbon Neutrality": In the version of the exposure draft, there is no mention of whether the old methodology will still be available after the restart. After the official draft was issued, the first thing I did was to find out if there was a clause on the invalidation of the old methodology, which clearly stated that "it is in line with the project methodology issued by the Ministry of Ecology and Environment", which also confirmed that the old methodology would be abolished.

As for which projects will be included in the new methodology, most likely afforestation, mangrove protection, solar thermal power generation and offshore wind power, everyone is waiting for the final introduction of the new methodology.

Li Qiuxi, senior consulting manager of carbon barriers: Emphasize that the "project methodology issued by the Ministry of Ecology and Environment" is different from the project methodology issued by the National Development and Reform Commission. The new regulations specify that methodologies are all prepared by the Ministry of Ecology and Environment, and stipulate the application conditions, accounting, monitoring, validation and verification requirements and time limits for methodologies.

But there is no mention of additionality here. This means that additionality arguments may no longer be required for some specific project types.

In addition, the new regulations emphasize that methodologies should be revised in a timely manner according to social development and industrial restructuring, which also synchronizes the practice of international emission reduction standards and is conducive to the development of follow-up projects.

36 Carbon: Which industries are good and which are good?

Yuchen Hu, partner of Fresh CapitalCCER is a huge incremental market: on the one hand, it can increase the emission costs of high-emission enterprises, on the other hand, it can also add additional income to new energy and low-carbon assets, forming a positive capital flow, bringing new vitality to China's carbon market, and carbon management enterprises will usher in a new round of development opportunities.

Due to the gradual standardization of the CCER market mechanism, it is not conducive to the previous speculative projects. For example, forestry carbon sink is expected to become one of the main projects of CCER, the type of forestry resources, property ownership will be clearly required in the new methodology, but there was a development chaos in the market before, not all forestry resources can become carbon sinks, such speculative projects will not be recognized.

Wang Jun, founder of Climate Future and author of "The Era of Carbon Neutrality": A reactivation for the entire carbon management market. At present, the theoretical maximum demand for CCER (the carbon market only includes the power sector) is 225 million tons per year, and the economic value is 12.889 billion yuan. In the later stage, as the carbon market expands, the demand for CCER and economic value will increase exponentially.

For subdivided industries, if the new methodology circulating in the market is true, it is a great benefit to the afforestation industry, solar thermal power generation, and offshore wind power enterprises, of course, it depends on how the final new methodology is defined.

Once CCER is restarted, the old project still has to conform to the new methodology, which means that a large number of projects that the developers have hoarded before are likely to not conform to the new methodology and will not be included in the recognition, which may be a negative for them.

Li Qiuxi, senior consulting manager of carbon barriersFor society as a whole, the restart of CCER will be conducive to effective regulation of carbon prices.

Article 9 of the Administrative Measures deletes "renewable energy", "forestry carbon sink", "methane emission reduction" and "energy conservation and efficiency" in the draft for comments, and only defines "carbon reduction and increase sink". There are two sides to this, on the one hand, there are no specific restrictions on the types of projects, and some unknown technologies and projects may be included in the scope; on the other hand, there may be disputes among the previously mentioned types, and there is uncertainty about whether they will be included.

Chen Yingwen, technical director of Zhongjian Carbon Management Consulting Company: The four methodologies that have been passed out: offshore wind power, solar thermal, mangroves, and afforestation related industries may usher in benefits, of course, CCER third-party auditors and consulting agencies will also be busier.

36Carbon: After the release of the new Administrative Measures, will previously filed projects be scrapped?

Han Cuilian, Director of Innovation Business Department of Tianjin Emissions Exchange: There is no clear statement at present, but my personal view is that the emission reductions accumulated during this period may not be issued again, and the reasons for the suspension are not only insufficient market absorption capacity, but also mentioned procedural flaws. At present, in the context of building an international CCER market and high-quality carbon emission reductions, it is likely that emission reductions during the moratorium will no longer be issued.

For projects that have been filed, CCER was suspended in 2017 and has been close to 7 years so far, and most projects have passed the first crediting period and need to be updated with baselines. Since most of these are renewable energy generation projects, it is likely that they will no longer be renewed, and the remaining 10-year credited projects and 20-year credited forestry projects are disputed.

Ideally, these projects would be allowed to resubmit their materials for recertification. If the recertification is approved, the emission reductions after September 22, 2020 will be calculated according to the new management measures, so that the project and emission reduction time will not conflict with the existing management methods, and these projects may also quickly form a batch of emission reductions to support compliance offset.

Ellen Wu Hu, General Manager of Rise Carbon Management Chinese mainland and Taiwan: CCER projects must be projects that started construction after June 13, 2012. This does not have a substantial impact on most types of projects, but it does affect forestry projects.

Previously, the time limit for forestry projects was implemented after February 16, 2005, but this time it is equivalent to a postponement of more than seven years. Projects filed before March 14, 2017 can continue to be issued, but the project emission reductions are generated after September 22, 2020, so no matter when the project is registered, only emission reductions after this point will be newly issued.

For newly registered projects, emission reductions can be retroactive for up to five years. In other words, there will be no emission reduction loss for projects within 5 years from the start of production to the registration of the project, and there will be no emission reduction loss for projects that are put into operation before September 22, 2020, and the registration date is before September 22, 2025.

Li Qiuxi, senior consulting manager of carbon barriers: For previously filed projects, it is clear that it is possible to apply for emission reduction registration, but the most important prerequisite is to comply with the methodology issued by the Ministry of Ecology and Environment. This has basically determined that previously filed projects also need to complete the verification and verification in accordance with the requirements of the new regulations before they can obtain project registration and issue a new CCER.

Possible problems with such projects include: first, the Ministry of Ecology and Environment has cancelled the previous category of methodology, and the project naturally cannot be re-registered; second, the Ministry of Ecology and Environment has announced the method credit batch, and the methodology of the project type may be published in a later batch, which needs to focus on policies and do a good job in preliminary work.