Carbon Trading Regulations Receive Approval In China

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The State Council of China has given its approval to a set of regulations aimed at standardizing the country’s emissions trading systems.

Although the “Interim Regulations on the Management of Carbon Emissions Trading” are yet to be published, the Ministry of Ecology and Environment indicates that it is likely to encompass provisions related to defining the scale of the national carbon market, identifying “key emission companies,” determining allocation of emissions allowances, overseeing data quality, and regulating trading operations, reports Securities Daily.

This can be seen as one of the final steps before the relaunch of the program, following the disclosure of several methodologies to quantify net emission reductions or removals by the ministry in late 2023. These included methodologies for forestation, solar thermal power, offshore wind power generation, and mangrove preservation.

Read more: China Certified Emission Reduction Program Set For Restart

China’s carbon market, launched officially in 2021, encompasses approximately 4.5 billion tonnes of CO2 emissions annually, all originating from the power sector, making it the world’s largest such market. Despite this, China’s regional carbon markets have been plagued by the lack of synchronized  laws and regulations, leading to a lack of common standards and hindering transparency.

The public consultation draft of the Interim Regulations mentions that no additional regional markets should be established once the regulations are implemented. It suggests that regional markets should gradually integrate into the national market. However, it remains unclear if this particular provision is retained in the officially approved version.

Speaking to, Zhou Di, an expert on technology and standards, pointed out that China’s carbon markets have fewer participants, inadequate laws, and limited flexibility in trading mechanisms compared to mature carbon markets worldwide. He emphasized that the Interim Regulations “clarify the basic principles and management requirements of carbon emissions trading,” “strengthen market supervision,” and “emphasize information openness and transparency.”

Similar to other regions, carbon offsets have come under scrutiny in China, with Greenpeace East Asia voicing concerns that forestry carbon projects in the country have inconsistent quality levels because of the low standard implementation or the outright lack of data collection.

Relevant: New Greenpeace Report Criticizes Carbon Offsets In China

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