Awakening the Carbon Giant: The Rebirth of China's Voluntary Carbon Market - Everything You Need to Know

This article shines a light on a significant insight from King & Wood Mallesons (KWM), the largest law firm in Asia.

Signed into effect by Chinese Prime Minister Li Qiang, a decree that came into force on May 1, 2024, establishes new guidelines for carbon emissions trading within the country. This strategic move positions the China Certified Emissions Reductions (CCER) market as an essential step towards achieving the country's ambitious decarbonization targets, known as '30,60': peaking emissions by 2030 and achieving carbon neutrality by 2060.

The system, divided into Compliance Carbon Market (CCM) and Voluntary Carbon Market (VCM), promises an innovative approach in emissions management. The CCM encompasses approximately 2,000 entities from the power sector, while the VCM focuses on the issuance and trading of CCER by companies and individuals, allowing CCM participants to offset up to 5% of their emissions through VCM credits.

According to KWM, eligible projects for CCER must focus on both carbon mitigation and sequestration, meeting strict criteria for authenticity, exclusivity, and additionality, ensuring transparency and integrity through third-party validation and verification.

The Ministry of Ecology and Environment (MEE) of China is developing specific methodologies for the VCM, including projects focused on forests, mangroves, and solar energy generation, adhering to the "principle of conservatism" to ensure a cautious and responsible approach in accounting for emissions reductions.

For more details on this principle and the operation of the Registry Authorities and Trading Institutions - specifically the China Beijing Green Exchange - we recommend reading the complete insight from KWM. Relevant articles such as "China releases carbon emissions trading regulations" and "Regulation to control carbon trading unveiled" from China Daily also provide valuable insights.

The progress in the development of the CCER in China marks a pivotal moment in the country's journey towards more sustainable carbon emissions management.