By  Zhang Shouzhi  Hu Ke  and Xu Beibei  King&WoodMallesons’ Dispute Resolution Group

Being the world’s largest developing country and largest emitter of greenhouse gases, China started in 2009 an ambitious campaign, largely on its own initiative, to reduce its carbon intensity (measured by emission per unit of GDP) by 40-45% in 2020 from 2005 levels. The 12th National Five-year Plan set two mandatory goals of reducing energy intensity by 16% and reducing carbon intensity by 17% in the term of 2011-2015. The Chinese government is taking measures to further adjust the industrial structure, to optimize energy structure, to improve energy efficiency, and to control energy consumption and greenhouse gas emission.

On 29 October 2011, the National Development and Reform Commission (the “NDRC”) issued the Notice of the General Office of the National Development and Reform Commission on the Pilot Trading of Carbon Emission Rights, according to which that Beijing, Tianjin, Shanghai, Chongqing, Hubei, Guangdong and Shenzhen would start pilot carbon emissions trading. From 2013 to 2014, the pilot provinces and cities (the “Pilot Regions”) have respectively developed carbon emissions trading schemes, set out management and trading rules, and launched the carbon emission trading systems; moreover, in July 2014 Beijing, Tianjin, Shanghai, Guangdong and Shenzhen completed the first compliance audit after regulated emitters surrendered their allowances.
Continue Reading China’s Pilot Carbon Markets at a Glance

Emissions trading refers to a mechanism for trading legal emissions rights as commodities with the aim of controlling the overall emission of pollutants into the environment and optimizing the allocation of emissions quotas. As a concept, emissions rights trading dates back over thirty years. However, it was not until the advent of the Kyoto Protocol which became effective in 2005, that the international community established the “Clean Development Mechanism” (“CDM”), a global emissions reduction regime. Under this mechanism, every developed country is required to commit to a certain amount of emissions reduction by a specified deadline. Those countries which generate more emissions than their certified emission reduction (“CER”) may purchase CER credits from the countries which have unused CER credits or which are not subject to emissions reduction commitments. In other words, enterprises in different countries may buy and sell rights to emit carbon dioxide by means of climate exchanges in a similar manner as they would trade stocks in stock exchanges.

By Xu Ping, Partner, FDIContinue Reading Establishment of the Tianjin Climate Exchange