Climate change: China’s voluntary carbon-credit market reboots in ‘milestone’ for emissions goals

Climate change: China’s voluntary carbon-credit market reboots in ‘milestone’ for emissions goals

22 Jan Climate change: China’s voluntary carbon-credit market reboots in ‘milestone’ for emissions goals

Posted at 10:00h in Asia by

China’s voluntary carbon market, suspended since 2017, officially resumed trading on Monday in Beijing’s latest move to enrich its carbon trading mechanisms in support of the national carbon-neutral goal.

New project registration under the China Certified Emission Reduction (CCER) scheme had been suspended because of low trading volume and a lack of standardisation in carbon audits, although existing projects continued to trade.

The long-awaited revamped CCER scheme now allows any enterprise to purchase carbon credits to offset its emissions, not just businesses currently covered under China’s compulsory national carbon trading market, known as the national Emissions Trading Scheme (ETS), according to state-owned China Central Television (CCTV).

The upgraded CCER scheme is expected to supplement the ETS to provide more diversified carbon financial instruments and trading products to accelerate China’s progress in reaching carbon neutrality by 2060, according to Qin Yan, lead carbon analyst at London Stock Exchange Group.

An aerial photo taken on November 11, 2022, shows a mangrove forest along the coastal area of the Shenzhen Bay in Shenzhen, south China’s Guangdong Province. Projects to restore such forests create carbon credits that emitters can buy to offset their emissions. Photo: Xinhua

“This is a milestone for China’s carbon market construction,” she said. “The two markets, the compulsory ETS and the voluntary CCER, will cover enterprises, entities and consumers in the whole society, unleashing the potential of carbon trading in achieving China’s dual carbon targets” of peaking carbon emissions by 2030 and achieving net zero emissions by 2060.

Current trading is mainly focused on the qualification and sales of carbon reductions by projects in four major areas, including forestation, solar thermal power, offshore wind power generation and mangrove revegetation, according to CCTV.

Further details of the first day of trading have not been disclosed, but it is expected that individuals will be allowed to sell carbon emissions generated from green behaviours under the CCER scheme in the future as the trading mechanism matures, according to CCTV.

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The CCER scheme, first launched in 2012, allowed companies trading under the national ETS to offset up to 5 per cent of their emissions by purchasing credits from certain emission reduction projects such as forestation and renewable power generation.
The ETS, which launched in 2021, is the world’s largest carbon trading market by greenhouse-gas emission volume: it covers 2,532 key emitters from China’s power generation sector, which contributed around 4.7 billion tonnes of carbon emissions in 2022, around 40 per cent of the national annual emissions.
The reboot of the CCER scheme comes after a key government think tank in charge of climate policy in November released proposed rules for registration procedures and guidelines for the design and implementation of voluntary carbon offset projects. The National Centre for Climate Change Strategy and International Cooperation, under the Ministry of Ecology and Environment, provided examples of carbon reduction activities in 16 industries, and included the use of renewable energy, energy efficiency enhancement, forestation and carbon capture and storage technology.

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More regulations are expected on cross-border trading under the CCER scheme, according to Liu Hongming, director of carbon market at Environmental Defense Fund, an international environmental non-profit

“The clarification of CCER international transaction rules in the future, or further exploration of possibilities in connecting the CCER scheme with the global market, such as through developing overseas CCER projects, will further stimulate trading enthusiasm and market vitality,” he said.

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