The Ministry of Ecology and Environment issued two documents in a week, and the CCER restart accelerated
Following the Ministry of Ecology and Environment (MEE) and the State Administration for Market Regulation (SAMR) jointly issued the Administrative Measures for Voluntary Greenhouse Gas Emission Reduction Trading (Trial) (hereinafter referred to as the "Administrative Measures") on October 20, the Ministry of Ecology and Environment (MEE) announced the methodologies for four voluntary greenhouse gas emission reduction projects on October 24, marking that the date for the official resumption of trading of CCER (Nationally Certified Voluntary Emission Reductions) is getting closer and closer.
It is understood that the methodologies of the four voluntary greenhouse gas emission reduction projects released this time specifically include afforestation carbon sinks, grid-connected solar thermal power generation, grid-connected offshore wind power generation, mangrove construction, etc., which are the main basis for guiding the design, implementation, validation and emission reduction accounting and verification of greenhouse gas voluntary emission reduction projects in specific fields.
It is worth noting that CCER, as one of the two main types of trading in China's carbon trading market, was launched in 2012 and stopped in 2017, one of the core reasons is that the methodologies of the acceptance project are mixed and the certification is difficult.
Shi Yichen, senior academic adviser of the International Institute of Green Finance at the Central University of Finance and Economics and chief economist of Zhongcai Green Index, told the National Business Daily that the resumption of CCER will be of great help to the increase in the scale and frequency of transactions in the carbon market. "Compared with SHEA (carbon emission allowances), CCER has more financial attributes and can play a better role in the price transmission mechanism." He said that if the project methodology meets international certification, some companies with export operations can also put their CCER projects on the international carbon sink market for trading. At the same time, Shi Yichen also pointed out that there are still certain challenges in the identification of "additionality" in CCER projects in the future.
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4 types of project methodologies are implemented
On October 20, the Ministry of Ecology and Environment and the State Administration for Market Regulation issued the Administrative Measures, which clearly stated that they would organize the establishment of a unified national greenhouse gas voluntary emission reduction trading institution and organize the construction of a national greenhouse gas voluntary emission reduction trading system.
Among them, one of the conditions that need to be met for the registration of a voluntary greenhouse gas emission reduction project is that it "belongs to the project methodology support field issued by the Ministry of Ecology and Environment".
Less than a week later, the Ministry of Ecology and Environment (MEE) released the methodology for the first batch of voluntary greenhouse gas emission reduction projects on October 24, including afforestation carbon sinks, grid-connected solar thermal power generation, grid-connected offshore wind power generation, and mangrove planting, adding another torch to the restart of CCER.
According to the Ministry of Ecology and Environment, the methodology of voluntary greenhouse gas emission reduction projects is the main basis for guiding the design, implementation, validation, accounting and verification of greenhouse gas emission reduction projects in specific fields. According to the Administrative Measures, all types of social entities shall independently and voluntarily develop greenhouse gas emission reduction projects in accordance with the methodology issued by the Ministry of Ecology and Environment, and the emission reduction effect of the project can be sold in the market and obtain the corresponding emission reduction contribution income after accounting and verification in accordance with the methodology.
It is understood that the Ministry of Ecology and Environment has previously publicly solicited methodological suggestions for voluntary greenhouse gas emission reduction projects, and organized multiple rounds of evaluation for more than 300 methodological proposals submitted by various parties in the fields of energy industry, forestry, waste treatment and disposal, and selected the first batch of 4 methodological suggestions in accordance with the principles of high social expectations, clear emission reduction mechanism, guaranteed data quality, both social and ecological benefits, and effective supervision, and organized the revision and improvement of the first batch of 4 methodological suggestions one by one.
Among them, the afforestation carbon sequestration methodology is applicable to afforestation of arbor, bamboo and shrub wasteland. The grid-connected CSP methodology is applicable to independent grid-connected CSP projects and the grid-connected CSP part of "CSP+" integrated projects. The grid-connected offshore wind power methodology is applicable to grid-connected offshore wind power projects more than 30 km offshore or with a water depth greater than 30 meters; The mangrove planting methodology is applicable to mangrove planting projects in areas suitable for mangrove growth, such as tidal flats without vegetation and retired breeding ponds.
Shi Yichen said in an interview with the "Daily Economic News" reporter that the importance of CCER is that it can encourage more non-emission control enterprises to participate in emission reduction actions independently, which can not only promote China's carbon market trading more actively, but also prepare for the future European carbon border tax. If the project methodology meets the international certification, some companies with export business can also put their CCER projects on the international carbon sink market for trading.
However, there is still a way to go in how to integrate the methodology with international standards and promote China's CCER projects to participate in international market transactions. Shi Yichen analyzed, "For example, there are some innovative CCER projects in China, so the relevant methodology is not well known and recognized internationally. If the relevant CCER projects want to be traded internationally, they need to benchmark the methodology against international standards, which can not only promote China's CCER projects to go international, but also facilitate international participation in China's CCER market, which is a win-win situation. ”
"Additionality" certification is challenging
It is understood that CCER was launched in 2012 and was stopped in 2017, mainly due to the National Development and Reform Commission's classification as "CCER has a small transaction volume and individual projects are not standardized".
Among them, "non-standard individual projects" can be equated with mixed methodologies and no unified standards. According to statistics, together with the 12 batches of CCER methodologies released by the Ministry of Natural Resources and the National Development and Reform Commission, as well as the methodologies of 10 regions such as Guangdong, Beijing, Sichuan, Guizhou, and Chongqing, there are nearly 300 methodologies, and the industries involve nearly 40 fields such as electric power, transportation, chemical industry, construction, and carbon sinks.
This is one of the reasons for the imbalance between CCER supply and demand, and it is expected that this problem will be solved after the Ministry of Ecology and Environment releases the first batch of four CCER project methodologies.
It is worth noting that the Administrative Measures stipulate that the primary conditions for applying for registration of voluntary greenhouse gas emission reduction projects are "authenticity, uniqueness and additionality".
Authenticity and uniqueness are easy to understand. The Administrative Measures require that the validation and verification agency shall be responsible for the compliance, authenticity and accuracy of the project validation report, and make a commitment in the project validation report. At the same time, according to the definition of the Administrative Measures, "uniqueness" means that the project does not participate in other greenhouse gas emission reduction trading mechanisms, and there is no duplicate identification of projects or double calculation of emission reductions.
As for "additionality", it means that when it is implemented as a voluntary greenhouse gas emission reduction project, compared with other alternatives that can provide the same products and services, it is not the best choice in terms of internal rate of return and financial indicators, and there are obstacles in terms of financing and key technologies, but the implementation of it as a voluntary emission reduction project can help overcome the above obstacles; It also has an additional emission reduction effect compared to the baseline scenario determined by the relevant project methodology, i.e., the project's greenhouse gas emissions are lower than the baseline emissions, or the greenhouse gas removals are higher than the baseline removals.
For example, a forest is absorbing carbon dioxide even if it is not managed in any way, and this part of the carbon is not additional, or the carbon reduction effect is not above the baseline. If management measures are taken, the carbon absorbed by forests increases, but this may not be the best option for the project owner in terms of internal benefits and financial indicators. Put simply, "additionality" refers to the lack of additional support for carbon reduction, and there will be various barriers that will prevent the project from being implemented.
Shi Yichen analyzed that in forestry carbon sequestration projects, some forest land existed historically. "From a technical point of view, it may be necessary to rely on historical satellite photos or other means to determine whether a piece of forest land is newly added; On the other hand, if the identification criteria are too strict, it will also cause some problems to the implementation of forestry carbon sequestration projects. ”
In Shi Yichen's view, if it is already woodland, it will not reflect the additional emission reduction effect. "For example, if a person's original mode of travel is changed from driving to taking online car-hailing, there is essentially no change in reducing emissions. However, if several people at the same time give up driving and choose carpooling, there is a significant reduction in total emissions. Or change from the original fuel vehicle to a new energy vehicle, and the emission will also be reduced. This involves the issue of baseline identification. ”
Cover image source: Visual China
