China closer to relaunch of certified carbon emission reduction program

The Ministry of Ecology and Environment has made significant progress toward relaunching the China Certified Emission Reduction program, a voluntary mechanism that will allow participants to earn tradable carbon credits.

On Tuesday, the ministry publicized the methodologies that will be used to quantify net emission reductions or removals for four types of projects: forestation, solar thermal power, offshore wind power generation and mangrove revegetation.

Four days earlier, it unveiled a regulation on CCER trading for trial implementation, vowing to gradually expand the number of sectors covered by the mechanism.

Industry insiders said the publication of the regulation, a key document for the mechanism's operation, meant the program might be relaunched soon.

Ministry of Ecology and Environment spokesman Liu Youbin said in June that the ministry would strive to relaunch CCER as soon as possible this year, adding that the infrastructure required for the program had essentially been completed.

CCER would be a useful complement to China's carbon trading market — the world's largest — said Wang Weiquan, deputy secretary-general of the Chinese Renewable Energy Industries Association.

Before it was suspended in 2017, the mechanism featured over 200 methodologies. With just four publicized so far, ahead of its relaunch, Wang said that meant the ministry was screening out project types with poor economic returns.

Launched in 2012, the program was suspended by the National Development and Reform Commission, the country's top economic planner, due to its low trading volume and the need to standardize its operation.

In a 2018 institutional reshuffle of the State Council, the country's cabinet, the responsibilities for tackling climate change and emission reductions — including management of CCER — were transferred from the NDRC to the Ministry of Ecology and Environment.

Wang said the types of projects that had been commercialized, such as photovoltaic power and land-based wind energy, would be excluded from the program, as their profitability was no longer dependent on the sale of carbon credits.

If the mechanism covered too many types of projects, prices might be lowered significantly, which could "make enterprises less motivated to reduce emissions", he said.

At a recent symposium on CCER, Ma Aimin, deputy director of the National Center for Climate Change Strategy and International Cooperation, said the CCER mechanism aimed to encourage the development of emerging low-carbon industries but might also help enterprises involved in the carbon market reduce their costs in ensuring market compliance.

In China's national carbon trading market, which was launched in July 2021, enterprises can still use leftover CCER credits to offset 5 percent of the carbon emission allowances they need to buy. The carbon trading market currently involves 2,162 power generators and is expected to be expanded to another seven industries, including steel and chemical production.

The credits have also been traded in regional pilot carbon trading markets, which were inaugurated in 2013 in six provincial-level regions, including Beijing and the provinces of Guangdong and Hubei. A separate market was also launched in Shenzhen, Guangdong.

Demand for the CCER's relaunch has been ignited by the expansion of carbon trading and the scarcity of carbon credits available on the market.