Carbon emissions trading should be carried out within the framework of regulations

Recently, with the court's judgment, the first carbon emission trading litigation case in Shandong Province came to an end in Liaocheng. The judgment pointed out that the content of the "Indicator Transfer Agreement" signed by the original defendant on October 29, 2021 regarding the transfer of carbon emission allowances was invalid, and the defendant Chiping a heating company returned the carbon emission allowance transfer money to the plaintiff Liaocheng company and compensated for losses totaling more than 330 yuan, and the carbon emission rights trading failed.

In October 2021, a company in Liaocheng signed an agreement with a heating company in Chiping, and a heating company in Chiping transferred all its five indicators of production capacity, coal, energy, carbon emission quotas and pollutant emissions to a company in Liaocheng at a package price of 37 million yuan. After the plaintiff paid 37 million yuan to the defendant, the defendant transferred other indicators other than the carbon emission quota index to the plaintiff's name, but could not transfer the carbon emission allowance, so the plaintiff requested to cancel the carbon emission trading and refund 59,632 tons of carbon emission allowance quota quota for a total of 3.39 million yuan. Why is the trading of four indicators of production capacity, coal, energy, and pollutant emissions successful, but the trading of carbon emission allowances alone, and how should carbon emission trading be carried out?

At present, the construction of China's carbon emission trading market is in its infancy. The construction of the national carbon emission trading market is an important part of China's ecological civilization construction, and an important measure to lead global climate governance, break energy and environmental constraints, achieve a win-win situation of social and economic quality and efficiency improvement and green and low-carbon development, and complete the goals of carbon neutrality and carbon peaking. The ETS aims to incentivize emitting entities to achieve carbon emission reduction targets at low cost through market mechanisms. The Ministry of Ecology and Environment has formulated departmental rules and regulations such as the Administrative Measures for Carbon Emission Trading (Trial), the Administrative Rules for Carbon Emission Trading (Trial), the Administrative Rules for Carbon Emission Allowance Settlement (Trial), and the Administrative Rules for Carbon Emission Rights Registration (Trial), which regulate the registration, trading and settlement activities of carbon emission allowances across the country and establish various management systems for carbon emission trading activities. Among them, the key emitting entities as the trading body of the national carbon emission trading market, and the requirement that carbon emission trading should be carried out through the national carbon emission trading system, is the basic requirement for carbon emission trading entities and trading venues, and the provisions have a fundamental role in encouraging emitting entities to complete carbon emission reduction targets at low cost through market mechanisms and achieve China's total greenhouse gas emission control and peak targets.

The plaintiff, a company in Liaocheng, and the defendant, a heating company in Chiping, traded through an agreement signed by both parties, but did not trade through the national carbon emission trading system. According to the second paragraph of Article 153 of the Civil Code of the People's Republic of China, "civil juristic acts contrary to public order and good customs are invalid", the clause on the transfer of carbon emission allowances in the "Indicator Transfer Agreement" signed by the two parties is invalid, and the defendant should return the carbon emission allowance transfer money received to the plaintiff and compensate the plaintiff for its losses. Both parties are national key emitting enterprises and should have known that the transaction was carried out from the national carbon emission trading system, and the original defendant was at fault for the consequences of the non-transfer of ownership caused by the over-the-counter transaction in this case. Therefore, the defendant should bear 50% of the plaintiff's damages. After the judgment was served, none of the parties appealed.

Using carbon trading to solve the problems of carbon emissions, carbon emission reduction, carbon peaking, and carbon neutrality is still a new thing for many people, and the lack of understanding of new things by enterprises led to the occurrence of this case. This case is a wake-up call for us, reminding us that when we carry out carbon emission trading, it is not like buying things in the market, you give me money, I will give you goods, and we must strictly follow the "carbon emission trading management measures (trial)", through the national carbon emission trading system. If key emitting enterprises are allowed to trade over-the-counter, it will lead to the virtual of the national carbon emission trading system, which is not conducive to the use of market mechanisms to promote greenhouse gas emission reduction, and will also affect the trading security and trading order of carbon emission rights, which is not conducive to the establishment of a green, low-carbon and circular economic system. At the same time, the case also reminds the administrative organs to strengthen the publicity of new things, and adopt a method that the masses like to see, and go deep into the front line to carry out publicity. When the enterprise encounters problems, follow up in time and provide all-round services.

It is against public order to trade carbon emission allowances privately outside the national ETS, and carbon trading should be carried out through the national ETS, which should be the deepest warning that this carbon trading lawsuit brings us.