The first specific regulation in the field of climate change brings new opportunities to the carbon market
□ Core Reading
Since the launch of the national mandatory carbon market for two and a half years, the overall operation has been stable, the system and norms have been improved, the market activity has gradually increased, the quality of carbon emission data has been comprehensively improved, the carbon emission management capacity has been significantly improved, and the role of the price discovery mechanism has become increasingly apparent.
□ reporter Zhang Wei
Tackling climate change is not something someone else wants us to do, it's something we have to do.
In recent years, China has actively and steadily promoted carbon peak and carbon neutrality, and has taken a series of important measures, including the construction of a unified national carbon market, which is also a major institutional innovation to promote the green and low-carbon development of China's economy and society.
In July 2021, the national carbon emission trading was officially launched. Since the launch of the national mandatory carbon market for two and a half years, the overall operation has been stable, the system and norms have been improved, the market activity has gradually increased, the quality of carbon emission data has been comprehensively improved, the carbon emission management capacity has been significantly improved, and the role of the price discovery mechanism has become increasingly apparent.
With the recent promulgation of the Interim Regulations on the Administration of Carbon Emission Trading (hereinafter referred to as the "Regulations"), China's first special regulation in the field of climate change, China's carbon market will be more effective, dynamic and internationally influential.
It covers about 5.1 billion tons of carbon dioxide emissions per year
"The national carbon market can not only play a decisive role in the allocation of carbon emission resources, but also realize the organic combination of an effective market and a promising government, and is a low-cost policy tool for the whole society, which is highly valued by the international community. Zhao Yingmin, vice minister of the Ministry of Ecology and Environment, said.
The construction of China's carbon market started from local pilots. In 2011, seven provinces and cities, including Beijing, Tianjin, Shanghai, Chongqing, Hubei, Guangdong and Shenzhen, were identified as pilot projects to carry out carbon emission trading, and successively launched trading.
Shanghai, one of the pilot projects, recently released its ten-year "report card". On November 26, 2013, the Shanghai Carbon Emission Trading Exchange opened. Over the past decade, the cumulative trading volume and value of the Shanghai carbon market have shown an increasing trend. As of December 29, 2023, the Shanghai carbon emission trading market has attracted more than 1,860 units to open accounts for trading, with a cumulative trading volume of 240 million tons and a cumulative turnover of 4.222 billion yuan, ranking first in the country in terms of the trading volume of national voluntary certified emission reductions (CCER). The managed enterprises have completed the settlement of carbon emission allowances in 2022, creating a record of 100% compliance for 10 consecutive years. At present, 378 key emitting enterprises have been included in the Shanghai carbon market.
The conclusions given by the pilot projects in Shanghai and other places are undoubtedly "successful and feasible" - effectively promoting the reduction of greenhouse gas emissions by enterprises, strengthening the low-carbon awareness of all sectors of society, and especially accumulating valuable experience for the exploration of the construction of a unified national carbon market. As a result, the national carbon market was listed and traded in July 2021, which means that the era of using "economic leverage" to control carbon emissions has officially begun.
At present, the national carbon emission trading market has successfully completed two compliance cycles. "At present, the expected construction goals have been achieved. Zhao Yingmin said.
Statistics from the Ministry of Ecology and Environment show that at present, the national carbon emission trading market covers about 5.1 billion tons of annual carbon dioxide emissions, and 2,257 key emitting enterprises are included, making it the world's largest carbon market covering greenhouse gas emissions.
The market performance is stable and improving. For example, in terms of market activity, there is a significant increase in the second compliance cycle compared to the first one. By the end of last year, the cumulative trading volume of the national carbon emission trading market reached 440 million tons, with a turnover of about 24.9 billion yuan. The second compliance cycle saw a 19% increase in volume and an 89% increase in turnover over the first one. Another example is that carbon prices have risen steadily as a whole. From 48 yuan per ton at the start to about 80 yuan per ton, an increase of 66%. In the second compliance cycle, the enthusiasm of enterprises to participate in transactions has increased significantly, accounting for 82% of the total number of enterprises participating in transactions, an increase of nearly 50% compared with the first compliance cycle.
Promote the carbon market to cover key industries with carbon emissions
"The overall performance of China's carbon market is better than that of developed countries. This is the conclusion of the Ministry of Ecology and Environment after organizing experts to conduct an assessment.
However, Zhao Yingmin admits that as a new thing that is still in its infancy, compared with the mature carbon markets of developed countries, China's carbon emission trading market still needs to be further built and improved, such as market activity, industry coverage, market participants, and inactive trading.
Wang Jinnan, an academician of the Chinese Academy of Engineering, also mentioned at the opening ceremony of Hong Kong Green Week on February 26 that there are still five major problems in the development of China's carbon market. The first is that China's carbon market is included in the market management of a single type of industry, and the vast majority of them belong to the power sector.
This is also proved by the research report of Huabao Securities. According to the report, from the perspective of the industries covered by the carbon trading system, power and construction are the key industries in China's carbon trading market to include emission reduction, accounting for about 76.5% and 52.9%.
"The degree of homogeneity between enterprises is high, the difference in carbon emission reduction costs is small, and a single trading entity cannot realize the complementary advantages between industries, and the path plan and clear time node arrangement for the orderly inclusion of key industries in the carbon market in the future. Wang Jinnan said that China's carbon market should expand the type of industries covered by the national carbon market, from the power industry to steel, cement, chemical and other fields, the cost difference between different industrial sectors and different emission reduction technologies is the basis for the development of the carbon market, increasing the difference in emission reduction costs in different industries, and improving the trading space.
The expansion of the carbon market is indeed planned. The reporter learned from the Ministry of Ecology and Environment that China's carbon emissions are mainly concentrated in key industries such as power generation, steel, building materials, nonferrous metals, petrochemicals, chemicals, papermaking, and aviation, which account for about 75% of our country's carbon dioxide emissions. "Integrating high-emission industries into the national carbon emission trading market as soon as possible, that is to say, seizing 75% of the country's emissions and giving full play to the decisive role of the market in the allocation of carbon emission resources, can make the carbon reduction cost of our whole society be optimized and minimized, so as to help achieve China's dual carbon goals and promote green and low-carbon transformation and the construction of a beautiful China." Zhao Yingmin said.
In addition, at present, the national carbon emission trading market only includes carbon dioxide, a greenhouse gas, into the control, and the trading products are only spot carbon emission allowances. According to the Regulations, the types of greenhouse gases and the scope of industries covered by carbon emission trading shall be proposed by the competent department of ecology and environment of the State Council in conjunction with relevant departments in accordance with the target study of national greenhouse gas emission control, and shall be implemented after approval by the State Council. Carbon emission trading products include carbon emission allowances and other spot trading products approved by the State Council.
The Regulations also clarify the working procedures related to the determination of industry coverage and key emitting enterprises. Zhao Yingmin said that the Ministry of Ecology and Environment will scientifically and reasonably determine the inclusion time of different industries, and actively promote the carbon emission trading market to cover key carbon emission industries in stages and steps.
Crack down on data fraud and curb false reporting and concealment of data
The opportunities brought by the Regulations to the construction and development of China's carbon market are not limited to expansion.
At present, the effective market regulation and control means of the national carbon emission trading market are insufficient, and the market stability mechanism is not perfect. The "Regulations" take the need for market regulation as an important consideration in formulating the total amount and allocation plan of carbon emission allowances, carry out market regulation, balance market supply and demand, prevent market risks such as carbon prices from getting out of control, and provide legal guarantees for the healthy, stable and orderly operation of the carbon market.
In response to the quality of data, which is the lifeblood of the carbon market, the Regulations also respond to the practical problems that restrict the healthy development of the carbon market, that is, what Wang Jinnan called "the quality of carbon emission data". Wang Jinnan believes that the lack of enterprise awareness and management, the lack of an effective integrity management system, and the lack of regulatory and law enforcement basis are the reasons for the authenticity, accuracy and standardization of emission data.
The Regulations put forward new and higher requirements for data quality management. As Zhao Yingmin concluded: in order to effectively guard the lifeline of data quality, the "Regulations" have really grown "teeth" in cracking down on carbon emission data fraud and curbing false reporting and concealment of carbon emission data, which can be summarized in six words, namely: strict control, strict investigation, and strict punishment.
Strict control is mainly reflected in: clarifying the prohibitions and penalties for relevant institutions and personnel, continuously reducing the space for data fraud through supporting systems and norms, and ensuring that data cannot be tampered with by building and improving the national carbon market management platform and using blockchain and digital technology. Through the working mode of annual verification and daily supervision, we will continue to strengthen data quality audits.
Serious supervision is mainly reflected in: screening abnormal data through the big data of the national carbon market management platform, finding problem clues through complaints and reports, and conducting on-site inspection and verification on this basis.
Severe penalties are mainly reflected in: clarifying the regulatory responsibilities of relevant departments, "zero tolerance" for carbon emission data fraud, severe penalties, and public exposure of violations of laws and regulations. The Regulations stipulate specific requirements for preventing and punishing the falsification of carbon emission data from four aspects: first, strengthen the main responsibility of key emitting enterprises, second, strengthen the management of technical service institutions, third, strengthen supervision and inspection, and fourth, increase penalties. In these respects, the "Regulations" have made specific and detailed provisions.
"I believe that in the next step, with the implementation of the Regulations, the quality of carbon market data will be further improved on the basis of the second compliance cycle. Zhao Yingmin said.
It is understood that after the promulgation of the "Regulations", no new local carbon markets will be built. Industries and enterprises included in the national carbon emission trading market will no longer participate in the local pilot carbon market, that is, they will not be subject to repeated control. Zhao Yingmin pointed out that local pilot carbon markets should refer to the "Regulations", improve the relevant management system, and strengthen supervision and management.
