China drafts rules for carbon market
Mainland China is planning hefty fines for companies that fail to comply with the rules of its national carbon trading market but has yet to decide how to set emission caps for big polluters, according to a draft government document.
Mainland China is planning hefty fines for companies that fail to comply with the rules of its national carbon trading market but has yet to decide how to set emission caps for big polluters, according to a draft government document.
Under the scheme, big emitters such as coal plants and factories will be given a cap on their CO2 emissions.
If they emit more than they have permits for, they must buy additional permits in the carbon market.
The mainland market is expected to be the world's biggest, covering around 10 per cent of the world's total carbon emissions from the outset.
The National Development and Reform Commission has drawn up a draft law that would provide the legal backbone for the scheme.
A final version will be sent to the State Council for approval next month.
In most of the mainland's seven existing pilot markets, companies that fail to comply with the rules get fixed fines but the national scheme will potentially be tougher.
"For each tonne of CO2 that companies fail to surrender permits to cover for, they will be fined 300 yuan (HK$379)," the draft said.
Unlike carbon markets elsewhere, the NDRC draft proposed that the central government should be able to adjust permit levels issued to each company and in the overall programme on an annual basis.
The NDRC proposal would allow mainland China to avoid situations such as the one in the European Union, where an ever-increasing surplus in permits since 2008 has cut demand, pushing the price down, with the regulatory body unable to interfere.
