The final judgment of Beijing's first carbon emission trading dispute was announced

The reporter learned from the Beijing No. 3 Intermediate People's Court that on December 28, the Beijing No. 3 Intermediate People's Court publicly pronounced a final judgment on a contract dispute between an environmental protection company in Beijing and a power generation company in Sichuan. According to reports, this case is the first carbon emission trading dispute case in Beijing.

Power generation companies procure carbon emission allowances,The environmental protection company did not perform the contract after winning the bid

In December 2021, a power generation company in Sichuan issued an announcement on the procurement of carbon emission allowances, and an environmental protection company in Beijing made a quotation and promised that if it fails to fulfill the agreement, a power generation company in Sichuan can purchase an equal amount of carbon emission allowances, and if there is a price difference, an environmental protection company in Beijing will make up for it. A power generation company in Sichuan confirmed that an environmental protection company in Beijing won the bid after comparison, and sent a notice of winning the bid to an environmental protection company in Beijing. After that, an environmental protection company in Beijing made it clear that it would no longer perform the contract, and in this case, a power generation company in Sichuan signed a separate contract with a third-party company to purchase the corresponding carbon emission allowances at a price higher than the unit price quoted by an environmental protection company in Beijing, resulting in a price difference. Therefore, a power generation company in Sichuan sued the court, demanding that an environmental protection company in Beijing pay it more than 2.89 million yuan for the price difference and the corresponding interest.

After trial, the court of first instance held that a power generation company in Sichuan and an environmental protection company in Beijing had established a contractual relationship for the procurement of carbon emission allowances involved in the case, and that the contract was legal and valid. Because an environmental protection company in Beijing clearly stated that it would no longer perform its contractual obligations, a power generation company in Sichuan purchased carbon emission allowances from a third-party company at a high price, resulting in the loss of the corresponding price difference to a power generation company in Sichuan, so an environmental protection company in Beijing should compensate a power generation company in Sichuan for the price difference and interest losses involved in the case in accordance with its commitment, and finally ruled that an environmental protection company in Beijing should pay more than 2.89 million yuan in the purchase price difference of carbon emission allowances and corresponding interest to a power generation company in Sichuan.

After the court of first instance made a judgment, an environmental protection company in Beijing appealed to the Third Intermediate People's Court in Beijing on the grounds that there was no contractual relationship between the two parties and that the contract was invalid, and that the environmental protection company in Beijing should not pay the price difference and interest to a power generation company in Sichuan.

The carbon emission allowance trading contract is established and valid

In response to the question of whether the carbon emission quota trading contract between a power generation company in Sichuan and an environmental protection company in Beijing was established, the Third Intermediate People's Court of Beijing held that the announcement of a power generation company in Sichuan was an invitation to make an offer under the law. An environmental protection company in Beijing participated in the selection in its own name and sent a "quotation form" to a power generation company in Sichuan, the content of which was specifically determined and stamped with the seal of an environmental protection company in Beijing, which should be an offer sent by an environmental protection company in Beijing to a power generation company in Sichuan in response to the invitation of a power generation company in Sichuan. After receiving the "Quotation Form" from an environmental protection company in Beijing, a power generation company in Sichuan determined that an environmental protection company in Beijing was the subject of a power generation company in Sichuan to trade carbon emission allowances involved in the case, and sent a notice of winning the bid to an environmental protection company in Beijing, which should be regarded as a commitment made by a power generation company in Sichuan to make an offer to an environmental protection company in Beijing; Because the notice of winning the bid has reached an environmental protection company in Beijing, the commitment made by a power generation company in Sichuan has taken effect at this time; In accordance with the law, the carbon emission allowance trading contract involved in the case had been established between the two parties when the commitment made by a power generation company in Sichuan took effect, and the court of first instance found that this was correct.

In response to the issue of whether the carbon emission allowance trading contract between a power generation company in Sichuan and an environmental protection company in Beijing is valid, the Third Intermediate People's Court of Beijing held that a power generation company in Sichuan did not violate the mandatory provisions of laws and administrative regulations by purchasing carbon emission allowances involved in the case and determining the trading entity by comparing and selecting them. Although an environmental protection company in Beijing does not have the qualifications of a national carbon emission trading entity, an environmental protection company in Beijing has a way to obtain disposable carbon emission allowances, if the two parties perform normally, an environmental protection company in Beijing knows and is ready to deliver its disposable carbon emission allowances to a power generation company in Sichuan through the national carbon emission trading system, and at the same time, a power generation company in Sichuan also has the qualifications to accept carbon emission allowances, so the trading method in which a power generation company in Sichuan finally obtains the carbon emission allowances involved in the case does not violate the law. Mandatory provisions of administrative regulations. A Beijing environmental protection company's claim that the carbon emission allowance trading contract between the two parties was invalid lacked factual and legal basis, and the court did not support it.

An environmental protection company in Beijing has constituted a fundamental breach of contract

针对北京某环保公司应否向四川某发电公司支付涉案碳排放配额采购差价款及相应利息的问题，北京三中院经审理认为，在双方就涉案碳排放配额交易达成约定后，北京某环保公司明确表示不再履行涉案合同义务，此时An environmental protection company in Beijing has constituted a fundamental breach of contract。因北京某环保公司在先多次作出承担差价款的承诺，且四川某发电公司最终与第三方的交易单价高于涉案合同，由此产生相应差价损失，北京某环保公司应依约予以赔偿。一审法院根据双方约定及在案证据认定北京某环保公司应向四川某发电公司支付的涉案碳排放配额采购差价款及利息数额适当，且不会造成双方当事人权利义务严重失衡，故予以维持。北京某环保公司上诉主张其不应向四川某发电公司支付涉案差价款及相应利息损失，依据不足，法院不予支持。

Accordingly, the final judgment of the Beijing Third Intermediate People's Court rejected the appeal and upheld the original judgment. The final judgment of the case has now taken effect.

"In this case, based on the facts of the performance of the contract, it can be seen that an environmental protection company in Beijing did not fully study and judge the risks of the transaction involved in the case, nor did it make sufficient preparations for the performance of the contract, resulting in the inability to perform the contract, and ultimately assumed the liability for the huge losses that could have been avoided." Lu Nan, the presiding judge of this case, reminded that the implementation of a carbon emission allowance trading system and the establishment of a national carbon emission trading market are important measures and means to implement major national decisions and promote the green and low-carbon transformation of enterprises. In particular, as a civil subject of carbon emission allowance trading, in addition to following the principle of good faith and the spirit of contract, it should also shoulder the social responsibility of promoting the development of China's green economy and the construction of ecological civilization, so as to avoid breach of contract caused by the pursuit of commercial interests, which will have an impact on the normal order of China's carbon emission trading market, which is not conducive to the steady progress of China's energy conservation and carbon reduction work.