BEIJING, Aug. 29 (Xinhua) -- China unveiled on Monday a guideline to promote green and low-carbon transition and strengthen the construction of the national carbon trading market.
The document proposes that by 2027, national carbon trading market will basically cover major emission-intensive industries and national voluntary greenhouse gas (GHG) emission reduction trading market will expand to include all key areas.
By 2030, the document comes up with basic completion of establishing a national carbon trading market based on a cap-and-trade system with both free and paid allocations, construction of a national voluntary GHG emission reduction trading market that is credible, transparent, standardized, broadly participatory, and aligned with international standards, and formation of a carbon pricing mechanism with a sound rules system and reasonable price levels to foster green and low-carbon transition.
-- Optimizing carbon emission quota management system
To build the national carbon trading market at a faster pace, the guideline says to expand industry coverage and types of GHGs in an orderly manner pursuant to related industries' development statuses, contributions to carbon and pollution reduction, data quality, and carbon emission characteristics.
Under such circumstances, the document stresses that China will further optimize the carbon emission quota management system, for which explicit expectations and transparency are key requirements, and related mid- and long-term carbon emission quota control objectives will be clearly defined on basis of socioeconomic development, industrial characteristics and low-carbon transition costs.
Moreover, the guideline requires that national carbon trading market and relevant local carbon markets under pilot operation should be planned as a whole. For existing pilot carbon trading markets, they should be built and operated in accordance with related requirements to boost regional green and low-carbon transition and are encouraged to go first in expanding coverage, improving market regulation mechanism, taking innovative regulatory measures, and developing carbon finance in a sound and orderly way.
-- Enriching trading products and services for carbon finance
Currently, China has established a national carbon trading market for fulfillment of mandatory emission reduction obligations by major emission entities and a national voluntary GHG emission reduction trading market for the incentives of voluntary emission reduction by society.
To vigorously improve carbon trading market's vitality, the document proposes to further enrich trading products. China will stably and prudently encourage financial institutions to explore and develop green financial products and services concerning carbon emission rights and verified emission reduction to better support GHG emission reduction.
Policies on financing with carbon assets as pledges and carbon repos will be issued and improved to standardize financial activities relating to carbon emission rights and broaden the channels for carbon asset management of enterprises, according to the guideline.
A carbon pricing mechanism centered on the national carbon trading market is expected to be consummated to fully tap the potential of price discovery of the market, and send effective price signals for finance-driven green and low-carbon development, says the guideline.
On expanding trading entities, China is to support banks and other financial institutions providing financing business with carbon assets as pledges in a standardized manner, properly encourage qualified financial institutions to participate in national carbon trading market transactions, and introduce non-obligatory players into the market at an appropriate time. For the national voluntary GHG emission reduction trading market, eligible natural persons will be introduced into the transactions step by step.
Apart from these, China will tighten supervision over transaction activities by streamlining the release of important policies and information, improving procedures on risk preventing, pre-alerting and handling, and conducting price tracking and assessment of the national carbon trading market to form reasonable transaction prices.
(Edited by Duan Jing with Xinhua Silk Road, duanjing@xinhua.org)
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