Zhong Huanping: Use market mechanisms to promote carbon emission reduction

In recent years, extreme weather such as heavy rainfall and typhoons have become more frequent, and it has become more and more urgent to solve the problem of climate change caused by greenhouse gas emissions.

On January 22, the National Greenhouse Gas Voluntary Emission Reduction Trading Market (hereinafter referred to as the Voluntary Emission Reduction Trading Market) was launched in Beijing. The construction of a voluntary emission reduction trading market is an institutional innovation to mobilize the whole society to participate in greenhouse gas emission reduction actions, and is another milestone in the construction of China's carbon market.

At present, China's total carbon emissions are large and high, and the total energy demand will continue to grow for a certain period of time, so the task of achieving carbon peak and carbon neutrality and responding to climate change is very arduous.

In 2021, the "Opinions on Deepening the Reform of the Ecological Protection Compensation System" issued by the Office of the Central Committee and the Office of the State Council proposed to accelerate the construction of a national energy use rights and carbon emission trading market, and improve the carbon emission offset mechanism based on the national greenhouse gas voluntary emission reduction trading mechanism.

In the same year, the "Opinions of the Central Committee of the Communist Party of China and the State Council on Completely, Accurately and Comprehensively Implementing the New Development Concept and Doing a Good Job in Carbon Peak and Carbon Neutrality" proposed to accelerate the construction and improvement of the national carbon emission trading market, gradually expand the market coverage, enrich the trading varieties and trading methods, and improve the management of quota allocation. Incorporate carbon sink trading into the national carbon emission trading market, and establish and improve ecological protection compensation mechanisms that can reflect the value of carbon sinks。

The "Opinions of the Central Committee of the Communist Party of China and the State Council on Comprehensively Promoting the Construction of a Beautiful China" released not long ago further clearly stated that the development of the national carbon market, steadily expand the coverage of the industry, enrich the varieties and methods of trading, and build and improve the national greenhouse gas voluntary emission reduction trading market.

Therefore, the launch and operation of the voluntary emission reduction trading market is a key measure to implement the major decisions and deployments of the CPC Central Committee, and is of great positive significance for promoting the green and low-carbon transformation of the economy and society and achieving high-quality development.

In addition, the launch of the voluntary emission reduction trading market is conducive to promoting the formation of a national carbon market system in which the mandatory carbon market and the voluntary carbon market are complementary and interconnected, and help achieve the goal of carbon peak and carbon neutrality.

In July 2021, China launched a national carbon emission trading market. However, up to now, the national carbon emission trading market has only been carried out in the power and other sectors, and although it will gradually cover other key emitting industries as planned, there are still many industries that have made important contributions to carbon reduction and sink increase, such as renewable energy, forestry carbon sinks, methane utilization, energy conservation and efficiency, etc., cannot obtain economic returns for emission reduction through market mechanisms.

After the launch of the voluntary emission reduction trading market, it will form China's carbon trading system together with the national carbon emission trading market, which is conducive to encouraging a wider range of industries and enterprises to participate in greenhouse gas emission reduction actions. All kinds of social entities may, in accordance with relevant regulations, independently and voluntarily develop greenhouse gas emission reduction projects, and after the emission reduction effects of the projects have been quantitatively verified by scientific methods and applied for registration, they can be sold in the market to obtain the corresponding emission reduction contribution benefits.

In October 2023, 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), which is a basic institutional arrangement to ensure the orderly operation of the voluntary emission reduction trading market. Subsequently, the Ministry of Ecology and Environment announced the first batch of four methodologies: afforestation carbon sink, grid-connected solar thermal power generation, grid-connected offshore wind power generation, and mangrove construction. In addition, a unified national registration and trading system has been built...... A series of measures have laid a good foundation for the launch of the voluntary emission reduction trading market.

Market construction is a complex system project, which cannot be accomplished overnight. Perfect laws and regulations, effective management mechanisms, reliable trading systems, and real emission data are all indispensable. However, as long as we work steadily, continue to struggle, and actively and steadily promote various basic work, we will be able to successfully achieve the set goals and ensure the safe, stable and effective operation of the voluntary emission reduction trading market.