The Ministry of Ecology and Environment (MEE) in China released guidelines signalling the revival of the domestic voluntary carbon market (VCM), alongside revealing the rules for account registration, giving final touches on the market’s reboot.
China’s VCM, known as China Certified Emission Reduction (CCER), restarted after a six-year hiatus. The market had been paused since 2017 for new project registrations while the government sought to strengthen regulatory frameworks.
China introduced its national compliance emissions trading system (ETS) in 2021, being one of the first Asian countries to do so. The world’s largest in terms of emissions covered, China’s ETS is estimated to account for >40% of its carbon emissions. This footprint is largely from its power sector.
After the completion of the first compliance period for China’s ETS, the government has been preparing to relaunch its CCER.
The discontinuation of the CCER plan in 2017 was due to low trading volumes and inadequate carbon audit standards. With the establishment of China’s national ETS, the revival of the CCER system gained momentum, aiming to address previous shortcomings and bolster carbon reduction efforts.
Under CCER, carbon emitters compensate credit-holding entities, such as renewable energy producers, for their credits. These voluntary CCER credits allow companies within the compliance markets, ETS, to offset their emissions.
They can be used to cover shortfalls in China Emissions Allowances (CEAs) or as tradable credits within the national ETS. But their use for offsetting emissions is restricted to only 5% of emissions exceeding the national ETS targets.
Earlier this year, the MEE introduced new legislation and approved 4 methodologies for CCER credit issuance, clearing the path for new projects and supplies to enter the market. The Beijing Green Exchange, to host the trading platform for CCER credits, also issued rules for CCER trading and settlement.