Voluntary emission reductions are ready to restart, and the carbon market is moving towards "two-wheel drive"

Recently, policies around the resumption of national certified voluntary emission reductions (CCER) have been issued frequently, which has basically cleared the policy and institutional obstacles to the resumption of CCER. Analysts believe that the launch of CCER marks the beginning of an era in which the national carbon market is "driven by two wheels" by the national mandatory emission reduction trading market and the national voluntary emission reduction trading market.

It is understood that CCER is another important policy tool launched by China to help achieve the goal of carbon peak and carbon neutrality after the national carbon emission trading market. In the past week, policies have been promulgated, including the management measures for voluntary greenhouse gas emission reduction trading, the publication of the methodology of the first batch of CCER projects, and the clarification of the applicable conditions, project boundaries, crediting periods and emission reduction accounting methods for carbon sink development projects.

"At present, the Ministry of Ecology and Environment is opening up the application channels for projects and emission reductions through institutional construction, and actively and steadily promoting the basic work of the voluntary emission reduction trading market." Xia Yingxian, director of the Department of Climate Change of the Ministry of Ecology and Environment, recently revealed that the system will be put into operation in the near future.

According to Xia Yingxian, after the launch of the voluntary emission reduction trading market, all kinds of social entities can independently and voluntarily develop greenhouse gas emission reduction projects according to the requirements of relevant regulations. The launch of the voluntary emission reduction trading market is conducive to supporting the development of forestry carbon sinks, renewable energy, methane emission reduction, energy conservation and efficiency enhancement projects, and is conducive to encouraging a wider range of industries and enterprises to participate in greenhouse gas emission reduction actions.

Industry insiders believe that the restart of the CCER market is an inevitable choice to accelerate the improvement of the carbon market mechanism, and the interaction between CCER and the carbon emission trading market can synergistically promote low-carbon development.

Shi Yichen, deputy dean of the International Institute of Green Finance at the Central University of Finance and Economics, pointed out in an interview that emission control enterprises can participate in the two markets, not only to achieve environmental protection goals through voluntary emission reduction, but also to purchase carbon allowances in the carbon emission trading market, which can not only enrich the way enterprises achieve annual emission control targets, but also effectively control the cost of emission reduction. For non-emission control enterprises, although they cannot directly enter the carbon emission trading market at present, they can explore participating in the voluntary emission reduction market to accelerate the realization of carbon neutrality goals.

From the perspective of the preparation of the voluntary emission reduction market, the trading system has become clearer after the resumption of CCER.

In terms of trading, the Ministry of Ecology and Environment (MEE) announced the first batch of four project methodologies: afforestation carbon sequestration, grid-connected solar thermal power generation, grid-connected offshore wind power generation, and mangrove planting. "We started from areas with high social expectations, low technical controversy, guaranteed data quality, and both social and ecological benefits, which are the main basis for the design, implementation, validation and accounting and verification of emission reduction projects for voluntary emission reduction projects. In the next step, the methodology of voluntary emission reduction projects will be released in batches and gradually expanded the scope of market support. Xia Yingxian said.

From the perspective of trading methods, the new national greenhouse gas emission reduction trading system has been opened in August. Market participants can submit application materials for opening registration accounts and trading accounts to the Beijing Green Exchange, and the previous situation of decentralized CCER trading in local carbon markets will no longer exist.

Tan Luyue, senior analyst at Refinitiv Carbon at the London Stock Exchange Group, expects the new trading system to be officially launched in November, and the list of CCER third-party verifiers will be released soon, "The new CCER emission reductions will be released on the trading system in the first to second quarter of next year at the earliest." "At present, a consensus has been formed in the industry that with the expansion of the carbon trading market to eight industries such as building materials, steel, and non-ferrous metals in the future, as well as the increase in carbon prices, the demand and economic value of CCER are expected to increase exponentially, and the market size may reach 10 billion yuan.

"At present, the CCER market size is about 1 billion yuan." Shi Yichen said that if China's carbon market expands to eight key emission control industries in an orderly manner, the total amount of carbon allowances in the market will reach 7 billion to 8 billion tons, and if the current carbon market price of 70 yuan/ton is conservatively estimated, the national performance demand alone will bring more than 20 billion yuan of CCER market demand. Coupled with the new demand brought about by the continuous improvement of enterprises' awareness of independent emission reduction in the future, the CCER market space is huge.

However, it is worth noting that the business scope of CCER after its launch may overlap with the current "green certificate" trading. The green certificate is the only proof of the environmental attributes of renewable energy in China, and part of the value of CCER also lies in the environmental attributes of renewable energy power projects. The biggest difference between the two is that green certificates do not allow secondary transactions, while CCER can be traded multiple times.

In this regard, some industry insiders have suggested that it may be a breakthrough to study and promote the convergence and coordination of green certificates and the national carbon emission trading mechanism and the greenhouse gas voluntary emission reduction trading mechanism by taking the opportunity of the launch of the CCER project methodology.

Shi Yichen believes that at present, China's carbon market, green certificate trading, green power trading, renewable electricity consumption guarantee mechanism and other green mechanisms exist at the same time and are managed by multiple heads, and the environmental rights and interests under various mechanisms are ambiguous, and there may be double counting of environmental rights and interests. In the future, it is recommended to focus on discovering the value of environmental elements and coordinate the connection of various green mechanisms. On the one hand, the responsibility for the development of green benefits will be implemented to the business entity, and the market transaction of green benefits for the purpose of performance will be improved; On the other hand, expand the application scenarios of green benefits, explore the specific needs of multinational companies and their industrial chain enterprises, export-oriented enterprises, and industry leaders, and create a green benefit trading environment for the purpose of independent transactions.