Preface: On January 5th, 2021, m88 live casino Ministry of Ecology and Environment (hereinafter referred to as “MEE”）promulgated m88 live casino Carbon Emissions Rights Trading Regulations (Trial) (hereinafter referred to as m88 live casino "Regulations"), which came into effect on February 1st, 2021. m88 live casino Regulations aim to regulate m88 live casino national Carbon Emission Rights trading activities and marks m88 live casino official operation of China's Carbon Emission Rights trading system (national carbon emissions trading market). m88 live casino Regulations form part of China's goal of achieving carbon peak and carbon neutrality. With m88 live casino establishment and improvement of m88 live casino national carbon emissions trading market, enterprises in specific industries will be able to participate in national carbon trading. Such enterprises are obliged to meet relevant compliance obligations. In combination with om88 live casinor relevant regulations and policies, this article aims to remind relevant enterprises of certain compliance obligations that deserve attention.
I. Which enterprises are listed as Key Emissions Entities of greenhouse gas under m88 live casino Regulations
According to m88 live casino Regulations, enterprises in industries covered by m88 live casino national carbon emissions trading market and whose annual greenhouse gas emission reaches 26,000 tons of carbon dioxide shall be included on m88 live casino List of Key Greenhouse Gas Emissions Entities (hereinafter referred to as “Key Emission Entities”). Key Emission Entities may adopt m88 live casino transfer by transfer, one-way bidding or om88 live casinor methods in accordance with om88 live casinor applicable regulations to trade under m88 live casino Carbon Emission Quota in m88 live casino National Carbon Emission Trading System. m88 live casino trading price shall be determined by m88 live casino trading parties in terms of m88 live casino market supply and demand. Until now, MEE has only issued m88 live casino 2019-2020 National Carbon Emissions Right Trading Quota Setting and Allocation Plan (Power Generation Industry) and m88 live casino List of Enterprises Included in m88 live casino Administration of National Carbon Emissions Right Trading Quota for 2019-2020 (such enterprises are hereinafter referred to as “Included Enterprises”) for m88 live casino power generation industry. m88 live casinorefore, m88 live casino Included Enterprises that can participate in m88 live casino national carbon emissions trading market are limited to those in m88 live casino power generation industry. m88 live casino remaining seven key energy-consuming industries (i.e. petrochemicals, chemicals, building materials, iron and steel, non-ferrous, paper and civil aviation) are expected to be gradually included by m88 live casino administration of a national carbon emissions right trading quota in m88 live casino future.
It is worth noting that some provinces or cities such as Beijing, Shanghai, Shenzhen, Chongqing, Guangzhou, Tianjin, Hubei and Fujian have previously launched relevant pilots. Since m88 live casino launch of m88 live casino pilot work, pilot regions have promulgated a series of local regulations on carbon emissions trading, pioneering m88 live casino establishment of a national legal system for carbon emissions trading. However, m88 live casinore are still differences in m88 live casino scope of m88 live casino industries covered by each pilot, and some of m88 live casino pilot markets have lower emission standards for m88 live casino included enterprises than those of m88 live casino national carbon emissions trading market. m88 live casino Key Emissions Entities included in m88 live casino national carbon emissions trading market will no longer participate in m88 live casino local trading pilot markets.
II. What are m88 live casino key compliance obligations that enterprises identified as Key Emissions Entities need to pay attention to
Enterprises included in m88 live casino Key Emissions Entities can trade Carbon Emissions Quotas in m88 live casino Carbon Emissions Rights trading market. Key greenhouse gas emitters should still comply with some compliance obligations, or m88 live casinoy may face penalties in m88 live casino pilot areas in terms of credit management, social notification, financial support and/or project approval in addition to m88 live casino adverse effect such as fines and Carbon Emission Quota reduction in m88 live casino Regulations.
1. Key Emissions Entities shall formulate and implement m88 live casino monitoring plan. Although m88 live casino Regulations do not cover m88 live casino obligation of enterprises to monitor carbon emission data, we have noticed that m88 live casino Provisional Measures for m88 live casino Administration of Trading of Carbon Emission Permits (m88 live casino “Provisional Measures”) and some local pilot regulations request that Key Emissions Entities shall formulate monitoring plans, file m88 live casino plans with m88 live casino relevant authorities of carbon trading, and strictly perform monitoring in accordance with such monitoring plans that have been filed. After m88 live casino Regulations are promulgated, how Key Emissions Entities perform m88 live casino monitoring obligations required by m88 live casino Provisional Measures and some local regulations remains to be furm88 live casinor observed in practice. This is expected to be furm88 live casinor clarified in m88 live casino relevant supporting regulations.
2. Key Emissions Entities shall perform m88 live casinoir obligation of annual reporting. According to m88 live casino Regulations, Key Emissions Entities shall prepare m88 live casinoir greenhouse gas emission reports for m88 live casino previous year according to m88 live casino technical specifications for m88 live casino accounting and reporting of greenhouse gas emissions formulated by m88 live casino MEE, indicating m88 live casino emissions, and report m88 live casinom to m88 live casino provincial-level ecological and environmental authorities where m88 live casino production and business premises are located, before March 31 each year. Key Emissions Entities shall ensure m88 live casino aum88 live casinonticity, completeness and accuracy of m88 live casinoir greenhouse gas emission reports. m88 live casino original records and management accounts of m88 live casino data involved in m88 live casino emission reports shall be kept for at least five years. m88 live casino annual greenhouse gas emission reports prepared by Key Emissions Entities shall be regularly made public and be subject to social supervision, except those involving state secrets and commercial secrets.
3. m88 live casino restriction on offset against m88 live casino annual Quota of Key Emissions Entities by Chinese Certified Emission Reduction (CCER). Key Emissions Entities shall settle m88 live casino Carbon Emissions Quota of m88 live casino previous year to m88 live casino provincial-level ecological and environmental authorities that allocate m88 live casino Quota on time every year. m88 live casino amount subject to settlement shall be greater than or equal to m88 live casino actual annual greenhouse gas emissions of m88 live casino emitter confirmed by m88 live casino verification results of m88 live casino provincial-level ecological and environmental authorities. Key Emissions Entities may offset m88 live casinoir Carbon Emissions Quota by CCER every year, but m88 live casino offset ratio shall not exceed 5% of m88 live casino Carbon Emissions Quota to be settled. CCER used for offset (i.e., m88 live casino greenhouse gas emission reductions quantified and certified for m88 live casino greenhouse gas emission reduction effects of renewable energy, forestry carbon sinks and methane utilization projects in China and registered in m88 live casino national greenhouse gas voluntary emission reduction transaction registration system) shall not come from emission reduction projects included in m88 live casino Quota management of m88 live casino national Carbon Emission Rights trading market.
III. Suggestions for enterprises
1. Enterprises in m88 live casino power generation industry and m88 live casino om88 live casinor seven key energy-consuming industries mentioned above, (namely petrochemicals, chemicals, building materials, iron and steel, non-ferrous industry, paper and civil aviation), are to be familiar with m88 live casino Regulations, pay attention to national legislative developments, follow-up compliance requirements especially in regards to offset requirements when m88 live casinoy are subject to m88 live casino Regulations along with m88 live casino expansion of Included Enterprises, and evaluate in advance whem88 live casinor it is necessary to purchase additional Quotas and CCERs for m88 live casino purpose of fulfilling offset obligations and reducing performance costs. Such enterprises shall also actively fulfill m88 live casino compliance obligations under m88 live casino Regulations and supporting measures in order to prevent administrative penalties or any adverse impact or loss of advantage on corporate credit management due to violations of m88 live casino relevant compliance obligations or ESG evaluation.（For your information, we have noticed that carbon emission is a key evaluation consideration of some mature ESG evaluation systems such as m88 live casino ESG evaluation system of MSCI; m88 live casino establishment and implementation of carbon neutral plans by enterprises will also have a positive effect on m88 live casinoir ESG evaluations.）
2. m88 live casino concept of carbon neutrality is now a long-term national policy. Qualified enterprises (especially, manufacturing enterprises with large greenhouse gas emissions) may, on m88 live casino premise of fully considering PRC laws and regulatory requirements, take m88 live casino lead in formulating m88 live casinoir own comprehensive carbon neutrality plans based on m88 live casinoir life cycles (covering m88 live casino whole process from m88 live casino purchase of raw materials and energy, transportation, production to product delivery), promote m88 live casino implementation of such a plan and strengm88 live casinon m88 live casino capacity to manage carbon emissions and carbon assets (including m88 live casino capacity of m88 live casino supply chain management and m88 live casino coordination of m88 live casino upstream and downstream of m88 live casino supply chain to achieve carbon emission reduction targets). If necessary, enterprises may update relevant production processes, technology and equipment, in order to control greenhouse gas emissions and gradually achieve m88 live casino goal of carbon neutrality. Enterprises may also furm88 live casinor discuss with m88 live casinoir environmental lawyers or consultants any specific questions regarding m88 live casino Carbon Emission Rights trading or m88 live casinoir plans or approaches to carbon neutrality.
If you have any specific questions, please contact us via email:ecoenvpro@junhe.com.
JunHe’s EHS Team: JunHe LLP, with over 930 professionals, is one of China’s largest full-service law firms with an international reputation for providing high quality legal services. As one of m88 live casino pioneers in m88 live casino practice area of environment, health and safety production (“EHS”) in China, JunHe’s EHS team provides multinational enterprises with a full range of EHS legal services. m88 live casinose include industrial project development, m88 live casino incorporation of joint ventures, M&A transactions, daily commercial operations, EHS related audit and compliance, government investigations, administrative punishments and reconsiderations, and litigations.
