Inspection and Enforcement in Chinese Carbon Emissions Trading: Progress, Problems, and Prospect

• Date: 01 July 2014

44 ELR 10596 ENVIRONMENTAL LAW REPORTER 7-2014

    

         

      

         

Environmental Law Reporter

Inspection and

Enforcement in

Chinese Carbon

Emissions

Trading: Progress,

Problems, and

Prospect

by Huizhen Chen

Huizhen Chen is a joint training Ph.D. candidate in the

School of Law of Sun Yat-Sen University in China, and the

Faculty of Law of Maastricht University in the Netherlands.

Summary

China is establishing a carbon emissions trading

scheme and has initiated a number of pilot projects

with robust measurement, reporting, and verication

systems and rigorous sanctions for noncompliance.

Although the project designs vary, they share a num-

ber of features, including favoring self-monitoring,

self-reporting, and third-party verication. Policy-

makers are also considering a program of emissions

permits and monitoring, and there are indications

that the program will include the authority to impose

major nancial penalties for noncompliance. Estab-

lishing an enforcement system has its challenges, how-

ever, particularly around the legality of rules adopted

in the pilot projects and the authority of the central

and local governmental entities that will be enforcing

these requirements. A multi-level enforcement system

implemented by central and local authorities that is

consistent with the Chinese legal system and a gradual

harmonization or centralization of authority may hold

promise for developing an eective system.

I. China’s Commitment to Reducing

Carbon Dioxide Emissions

Climate cha nge presents global challenges for sustainable

development. As a developing country, China is not bound

by the greenhouse gas (GHG) emissions reduction target

of the Kyoto Protocol. However, the reduction of carbon

dioxide (CO2) emissions has been established a s a binding

target in the Guidelines of the Twelfth Five-Year Planning

on National Economic and Socia l Development, which

was passed by the National People’s Congress on March

14, 2011. Specically, China has stated its intent to reduce

its CO2 emissions within the next ve years by 17% per

unit of gross domestic product (the so-called carbon inten-

sity), compared with emissions in 2005.1

e Chinese government has announced its intention

to establish a GHG emissions trading scheme (ETS). e

Twelfth Five-Year Planning Guideline, which covers the

years 2011 to 2015, states explicitly that a carbon emissions

trading market will be established gradually.2 Activity

began with a notice issued by the National Development

and Reform Commission on October 29, 2011, granting

seven provinces and municipalities—Beijing, Chongqing,

Guangdong, Hubei, Shanghai, Shenzhen, and Tianjin

—the right to start pilot ETS projects3 in an attempt to

explore dierent models of emissions trading at the local

level before the possible establishment of a national ETS.

As of the end of 2013, the pilot projects in Beijing,

Guangdong, Shanghai, Shenzhen, and Tianjin had been

ocially launched. Each of these pilot projects is designed

and implemented independently by the local government,

resulting in variations in the design features in each proj-

ect. However, several important design features are also

common to all projects.

One aspect of par ticular importance is the develop-

ment of eective en forcement measures to ensure a high

level of compliance and ecient functioni ng of emissions

trading. Only with high levels of complia nce by the emit-

1. N’ P’ C.  P’ R  C, G 

 T F-Y P  N E  S

D [Zhonghua Renmin Gongheguo Guomin Jingji He Shehui

Fazhan Di shier ge Wunian Guihua Gangyao] (Mar. 16, 2011) (in Chinese;

author’s translation).

2. Id. at ch. 21, §1.

3. N’ D.  R C.  P’ R  C, N

 I P P  E T [Guojia Fazhan

Gaige Wei Bangongting Guanyu Kaizhan Tanpaifangquan Jiaoyi Shidian

Gongzuo De Tongzhi] (Oct. 29, 2011) (in Chinese; author’s translation).

Copyright © 2014 Environmental Law Institute®, Washington, DC. Reprinted with permission from ELR®, http://www.eli.org, 1-800-433-5120.