Opening a New Situation of the Rule of Law in Carbon Emission Trading: Interpretation of the Interim Regulations on the Administration of Carbon Emission Trading

The "Interim Regulations on the Administration of Carbon Emission Trading" was recently announced and will come into force on May 1, 2024. How will this regulation regulate the development of the carbon market? The relevant officials of the Ministry of Justice and the Ministry of Ecology and Environment interpreted the regulations.

Carbon emission trading is an important policy tool to control and reduce greenhouse gas emissions such as carbon dioxide through market mechanisms, and to help actively and steadily promote carbon peak and carbon neutrality.

According to the relevant persons in charge of the two departments, in recent years, the construction of China's carbon emission trading market has been steadily promoted. In July 2021, the national carbon emission trading market was launched. Since its launch, the national carbon emission trading market has been running smoothly as a whole, covering an average of about 5.1 billion tons of carbon dioxide emissions per year, accounting for more than 40% of the country's total emissions. By the end of 2023, a total of 2,257 power generation companies have been included in the national carbon emission trading market, with a cumulative turnover of about 440 million tons and a turnover of about 24.9 billion yuan.

At the same time, the shortcomings in the construction of the national carbon emission trading market system are becoming increasingly obvious. Previously, there were no laws and administrative regulations on the management of carbon emission trading in China, and the operation and management of the national carbon emission trading market were implemented in accordance with the rules and documents of the relevant departments of the State Council.

The formulation of the regulations summarizes practical experience, adheres to the whole process management, covers all major links of carbon emission trading, and avoids institutional gaps and blind spots. At the same time, based on the fact that China's carbon emission trading is a new thing and is still being explored, it is important to build a basic institutional framework, maintain the necessary flexibility of relevant institutional design, and leave room for future development. In addition, in view of the prominent problem of carbon emission data fraud, efforts should be made to improve the system and mechanism, effectively prevent and punish, and ensure the function of carbon emission trading policy.

The relevant person in charge of the two departments said that the regulations have built the basic institutional framework for the management of carbon emission trading from six aspects: first, the legal status and responsibilities of registration institutions and trading institutions. The second is the coverage of carbon emission trading, as well as trading products, trading entities and trading methods. The third is the determination of key emitting enterprises. Fourth, the allocation of carbon emission allowances. Fifth, the preparation and verification of emission reports. Sixth, the settlement of carbon emission allowances and market transactions.

The authenticity of emission data is the basic premise for the normal operation of carbon emission trading and the performance of policy functions. The relevant person in charge of the two departments said that in terms of preventing and punishing the falsification of carbon emission data, the regulations mainly provide for four aspects:

The first is to strengthen the main responsibility of key emitting enterprises. Key emitting enterprises are required to formulate and strictly implement emission data quality control plans, truthfully and accurately calculate their greenhouse gas emissions, prepare annual emission reports, and be responsible for the authenticity, completeness and accuracy of the reports, disclose information to the public in accordance with regulations, and keep original records and management ledgers.

The second is to strengthen the management of technical service institutions. The regulations regulate the conduct of technical service institutions entrusted to carry out inspection and testing related to greenhouse gas emissions, as well as technical service institutions entrusted to prepare annual emission reports and conduct technical audits of annual emission reports.

The third is to strengthen supervision and inspection. It stipulates that the competent department of ecology and environment and other departments responsible for supervision and management may conduct on-site inspections of key emitting enterprises and technical service institutions.

Fourth, increase the severity of punishment. For those who commit fraud in the inspection and testing related to greenhouse gas emissions, the preparation of annual emission reports and technical audits, strict penalties such as fines, orders to suspend production for rectification, cancellation of relevant qualifications, and prohibition from engaging in corresponding businesses, and the establishment of a credit record system.

The reporter learned that in order to ensure the smooth implementation and implementation of the regulations, the relevant parties will continue to do a good job in publicity and implementation, and follow up the supporting system in a timely manner to improve the regulatory infrastructure.

The regulations have made clear provisions on the construction of the management platform of the national carbon emission trading market, and the relevant parties will take the implementation of the regulations as an opportunity to coordinate and integrate the forces of all aspects, accelerate the construction of the management platform, improve the level of informatization and intelligence of supervision, and form a joint regulatory force.