China to enforce Interim Regulations on Carbon Emission Trading, Target False Data Fabrication

BEIJING, February 29, 2024 – China is set to enforce its Interim Regulations for the Management of Carbon Emission Trading from May 1, 2024, according to a report in Global Times. The nation’s Ministry of Ecology and Environment (MEE) highlighted the significance of this initial specialized legislation, providing a legal framework for the operation and management of the world’s largest carbon market, covering the highest volume of greenhouse gas emissions.

Carbon emission trading, the practice of buying and selling permits for emitting greenhouse gases, is now governed by designated emitters possessing such rights.

A policy briefing by China’s State Council Information Office in Beijing shed light on the crucial aspects of the Interim Regulations for the Management of Carbon Emission Trading. This marks a pivotal moment as the first administrative regulation explicitly outlining the carbon emission trading system, addressing climate change in the country.

During the briefing, Zhao Yingmin, vice minister of MEE, emphasized the regulations’ focus on institutional mechanisms, trading activity regulation, data quality assurance, and penalties for illegal activities. These provisions aim to offer robust legal support for the healthy development of China’s carbon market, marking the inception of comprehensive laws and regulations for the nation’s carbon market.

The implementation of these regulations holds great significance in achieving China’s “dual carbon” goals – peaking carbon emissions by 2030 and achieving carbon neutrality by 2060 – while fostering a broader green and low-carbon transition in society.

As per Zhao, the national carbon market, initiated on July 16, 2021, successfully completed two compliance periods, covering approximately 5.1 billion tons of CO2 emissions. With 2,257 key emission units included, it stands as the world’s largest carbon market in terms of the greenhouse gas emissions addressed. The total trading volume reached 440 million tons by the end of the previous year, resulting in a 35 billion yuan ($4.86 billion) reduction in overall carbon emission reduction costs within its two compliance cycles.

Zhang Yaobo, director general of the Fourth Bureau of Legislation of the Ministry of Justice, underscored the primary purpose of the regulations during the Monday briefing. He noted that current issues, such as carbon emission falsification, need legislative attention. The regulations, therefore, prioritize authentic carbon emission data, aiming to prevent and penalize falsification. The emphasis is placed on enhancing institutions and mechanisms, highlighting the responsibility of key emission units, strengthening supervision of technical service organizations, intensifying inspections, and increasing penalty severity.

According to Zhang, those found guilty of falsifying or fabricating data could face fines ranging from more than five times to less than 10 times their illegal gains. Alternatively, they may face up to a 1-million-yuan fine if no illegal gains or gains less than 200,000 yuan are obtained. In severe cases, violators may be prohibited from engaging in relevant business activities.