General GHG emissions regulation

Regulation of emissions

Do any obligations for GHG emission limitation, reduction or removal apply to your country and private parties in your country? If so, describe the main obligations.

China has not undertaken the compulsory obligation to reduce emissions under the United Nations Framework Convention on Climate Change, but promises to make voluntary emission reductions. In accordance with domestic law, Chinese private enterprises have a legal obligation to save energy and reduce emissions.

GHG emission permits or approvals

Are there any requirements for obtaining GHG emission permits or approvals? If so, describe the main requirements.

China has not yet established a system of GHG emission permits or approvals.

Oversight of GHG emissions

How are GHG emissions monitored, reported and verified?

The National Development and Reform Commission, in conjunction with the competent departments of relevant industries, formulates measures for the management of enterprise emission reports, and improves the guidelines and technical specifications for the accounting and reporting of corporate GHGs. The competent departments responsible for climate change are provinces and municipalities separately listed on the State Plan under the National Social and Economic Development programme, which organise and carry out data auditing and reporting. Major emission entities must report carbon emission data in a timely manner according to the regulations. Local competent departments must organise third-party verification agencies to verify the annual emission reports and supplementary data tables submitted by enterprises (or other economic organisations; all referred to as enterprises below) and to examine the emission monitoring plans. Major emission entities and verification institutions are responsible for the authenticity, accuracy and completeness of the data. The process is as follows: first, enterprises account for and report GHG emissions and related data on an annual basis in accordance with the requirements of the enterprise’s GHG emission accounting methods and reporting guidelines. In addition, according to the need for quota allocation, enterprises are required to account for and report other relevant basic data not covered by the above-mentioned guidelines, and to develop and submit emission monitoring plans as required. These are used to regulate the monitoring and accounting activities of GHG emissions of relevant enterprises. Second, the local authorities organise third-party verification agencies to verify annual emission reports and supplementary data sheets submitted by enterprises and to review emission monitoring plans. Finally, the competent local authorities organise the review of the emission reports submitted by enterprises and the verification reports and monitoring plans issued by the third-party verification agencies, and ensure the quality of the data by means of random inspection and expert review according to the actual conditions.

GHG emission allowances (or similar emission instruments)

Regime

Is there a GHG emission allowance regime (or similar regime) in your country? How does it operate?

The carbon trading department under the State Council shall, according to the requirements of national GHG emission control objectives, give comprehensive consideration to GHG emissions, economic growth, industrial structures and energy structures. The major emission entities eligible for trading and other factors of the state, as well as the provinces, autonomous regions and municipalities directly under the central government, determine the total emission quotas of the state. Emission quotas will be mainly assigned for free during the initial period. Paid use of emission quotas will be introduced in due time and the proportion of paid use will be gradually increased. The carbon trading department under the State Council will reserve a certain amount of quotas from the total emission quotas for paid use, market regulation and major construction projects, etc. Earnings obtained from paid use will be spent on promoting carbon reduction by the state and relevant capacity building. The carbon trading department under the State Council will, in light of the specific circumstances of the different industries and with reference to the opinions of the relevant industry authorities, determine uniform methods and standards for free use of quotas. All provinces, autonomous regions and municipalities directly under the central government may, in light of their local realities, formulate and implement methods and standards that are more strict than the uniform national methods and standards for the free use of quotas. The carbon trading department under the State Council will be responsible for establishing and managing the carbon emission permit trading registration system (the registration system), which is used for recording the holding, transfer, payment, cancellation and other relevant information of the emission quotas. The information in the registration system shall be the final basis for determining the ownership of the emission quotas. Accounts with different functions will be respectively opened for the carbon trading department under the State Council, the provincial carbon trading departments, major emission entities, trading institutions and other market participants, etc, in the registration system. After opening accounts according to the corresponding requirements of the carbon trading department under the State Council, participants may conduct relevant business operation of quotas management in the registration system.

Registration

Are there any GHG emission allowance registries in your country? How are they administered?

Pilot provinces and cities for carbon emissions trading have specific provisions. For example, the Measures for the Administration of Beijing’s Carbon Emission Permit Trading (for Trial Implementation) stipulates that the Municipal Development and Reform Commission shall establish a carbon emission permit trading registration system for the issuance of quotas and the management of contract implementation. Major emission entities and voluntary trading units will register and manage their carbon emission rights through the register book, including the possession, transfer, alteration, surrender, offset and cancellation of carbon emission rights.

Obtaining, possessing and using GHG emission allowances

What are the requirements for obtaining GHG emission allowances? How are allowances held, cancelled, surrendered and transferred? Can rights in favour of third parties (eg, a pledge) be created on allowances?

China is drawing up an Interim Regulation of National Administration of Carbon Emission Permit Trading. Carbon emission quotas follow the principles of ‘uniform industry distribution standards’, ‘total emission quotas in different areas’ and ‘flexible adjustment of reserved quotas’. The National Development and Reform Commission determines the regional total quotas according to GHG emissions, economic growth, industrial structure, energy structure and other factors, and reserves some quotas for paid distribution, market regulation and major projects construction. Local governments allocate local quotas to enterprises that control emissions in accordance with the allocation standards set by the Development and Reform Commission. Quota pledge and other programmes are being explored.

Trading of GHG emission allowances (or similar emission instruments)

Emission allowances trading

What GHG emission trading systems or schemes are applied in your country?

China initially focused on voluntary GHG emission reduction transactions. In 2011, seven provinces and cities (including Beijing, Tianjin, Shanghai and Guangdong) carried out pilot projects on carbon trading and tried to implement compulsory emissions reduction trading. Taking the Beijing Environmental Exchange as an example, the types of transactions include: carbon emission quotas; approved carbon emission reductions; available and approved carbon emission reductions, including certified voluntary emission reductions; carbon emission reductions for energy conservation projects; and forestry carbon sink projects carbon emission reductions.

Trading agreements

Are any standard agreements on GHG emissions trading used in your country? If so, describe their main features and provisions.

China has regional emission exchanges, such as Beijing and Tianjin. They all have standard agreements, but they are not exactly the same. Taking Beijing as an example, the main terms are: the declaration of the two parties; opening a transaction fund account; the declaration of the transaction; deposit and withdrawal of funds; application for reservation; alteration and termination of the transaction, the authorised representative of the trader; liability and exemption clauses of the two parties; settlement of disputes; and supplementary provisions.

Law stated date

Correct on

Give the date on which the above content is accurate.

10 August 2020.