China tightens polluter rules ahead of carbon market expansion

China has implemented stricter regulations for industrial polluters as part of its national carbon market expansion efforts. These measures include imposing larger fines on entities caught falsifying data related to emissions reductions. The tightening of rules underscores China’s commitment to combatting climate change and ensuring the integrity of its carbon market.

By imposing stricter penalties for falsifying emissions data, China aims to enhance transparency and accountability within its carbon market. This move is crucial for maintaining the credibility of carbon trading mechanisms and incentivizing genuine emission reductions among participating entities.

The decision to toughen rules for industrial polluters reflects China’s determination to address environmental challenges and transition towards a low-carbon economy. By holding polluting industries accountable for their emissions and imposing financial penalties for non-compliance, China is sending a clear signal that it takes climate action seriously.

Furthermore, these measures are aligned with China’s broader efforts to reduce greenhouse gas emissions and meet its climate targets. As the world’s largest emitter of greenhouse gases, China plays a pivotal role in global climate action, and its actions to strengthen regulations on industrial polluters demonstrate its commitment to fulfilling its international climate commitments.

Overall, China’s decision to tighten rules for industrial polluters participating in its carbon market expansion underscores the country’s commitment to combatting climate change and accelerating the transition to a sustainable, low-carbon future. By implementing stricter regulations and imposing penalties for non-compliance, China is taking proactive steps to ensure the effectiveness and integrity of its carbon market while driving meaningful emissions reductions across key industrial sectors.

The regulations, signed off on Sunday (Feb 4) by Premier Li Qiang and to come into force from May, give greater powers to the Ministry of Ecology and Environment as China prepares to extend the system, which currently covers about 2,200 utilities that are responsible for roughly 4.5 billion tonnes a year of greenhouse gas emissions.

Participants found to have withheld or misreported emissions data face fines of as much as two million yuan (S$378,386) and deductions from their future allocation of pollution allowances, according to the amended market regulations.

The changes also include measures aimed at reducing the supply of free allowances as the market, which has faced criticism for being too lenient, aims to do more to compel large emitters to cut emissions.

Chinese environment officials are continuing to study plans to expand the market to additional industries – including aluminium and cement production – from this year. The intention is to cover about 70 per cent of the nation’s emissions by 2030, under efforts to meet President Xi Jinping’s pledge for China to hit net zero by 2060.

Bureaucrats have been considering other tools including extending trading in the compliance market to financial institutions, launching an auction mechanism, and the restart of voluntary carbon offsets, according to Xi Liang, a professor of sustainable transitions in construction and infrastructure at University College London.

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