Premier Li Qiang recently signed a State Council order, announcing the Interim Regulations on the Management of Carbon Emission Trading (hereinafter referred to as the "Regulations"), which will come into effect on May 1, 2024.

Carbon emission trading is an important policy tool for controlling and reducing greenhouse gas emissions such as carbon dioxide through market mechanisms, and helping to actively and prudently promote carbon peak and carbon neutrality. It is of great significance to formulate specialized administrative regulations to provide clear legal basis for the operation and management of the national carbon emission trading market, and to ensure and promote its healthy development. The Regulations summarize practical experience, adhere to full process management, focus on building a basic institutional framework, and ensure the full play of the policy function of carbon emission trading. The Regulations consist of 33 articles, mainly including the following content.

One is to adhere to the leadership of the Party. To clarify the management of carbon emissions trading and related activities, we should adhere to the leadership of the CPC and implement the party and national lines, policies, decisions and deployment.

The second is to clarify the supervision and management system. It is stipulated that the ecological environment regulatory department of the State Council is responsible for the supervision and management of carbon emission trading and related activities, and relevant departments of the State Council are responsible for relevant supervision and management work according to their respective responsibilities.

The third is to establish a basic institutional framework for carbon emission trading management. Clarify the legal status and responsibilities of national carbon emission rights registration and trading institutions, the coverage of carbon emission rights trading, trading products, trading entities and trading methods, determination of key emission units, allocation of carbon emission quotas, preparation and verification of annual greenhouse gas emission reports, as well as carbon emission quota clearance and market trading.

The fourth is to prevent and punish the falsification of carbon emission data. Clear regulations are mainly made on strengthening the main responsibility of key emission units, strengthening the management of technical service institutions, strengthening supervision and inspection, and increasing punishment.

Original document

Order of the State Council of the People's Republic of China

No. 775

The Provisional Regulations on the Management of Carbon Emission Trading have been passed at the 23rd Executive Meeting of the State Council on January 5, 2024, and are now promulgated. They will come into effect on May 1, 2024.

Premier Li Qiang

January 25, 2024

Interim Regulations on the Management of Carbon Emission Trading

Article 1: In order to standardize carbon emission trading and related activities, strengthen the control of greenhouse gas emissions, actively and steadily promote carbon peak and carbon neutrality, promote green and low-carbon development of the economy and society, and promote ecological civilization construction, this regulation is formulated.

Article 2: These regulations apply to carbon emission trading and related activities in the national carbon emission trading market.

Article 3 The management of carbon emissions trading and related activities should adhere to the leadership of the CPC, implement the Party's and the country's line, guidelines, policies and decision-making arrangements, adhere to the adaptation of greenhouse gas emission control to economic and social development, adhere to the combination of government guidance and market regulation, and follow the principles of openness, fairness and impartiality.

The country strengthens international cooperation and exchanges in the field of carbon emission trading.

Article 4: The competent ecological and environmental department of the State Council is responsible for the supervision and management of carbon emission trading and related activities. The relevant departments of the State Council are responsible for the supervision and management of carbon emission trading and related activities in accordance with their respective responsibilities.

The ecological environment regulatory department of the local people's government is responsible for the supervision and management of carbon emission trading and related activities within its administrative region. The relevant departments of the local people's government are responsible for the supervision and management of carbon emission trading and related activities within their respective administrative regions according to their respective responsibilities.

Article 5: National carbon emission rights registration institutions shall, in accordance with relevant national regulations, be responsible for registering carbon emission rights trading products and providing trading settlement services. The national carbon emission trading institutions are responsible for organizing centralized and unified carbon emission trading in accordance with relevant national regulations. The fees for registration and transactions should be reasonable, and the fee items, fee standards, and management methods should be made public to the society.

The national carbon emission rights registration and trading institutions shall, in accordance with relevant national regulations, improve relevant business rules, establish risk prevention and control and information disclosure systems.

The competent ecological and environmental department of the State Council, in conjunction with the market supervision and administration department of the State Council, the People's Bank of China, and the banking supervision and administration agency of the State Council, shall supervise and manage the national carbon emission rights registration and trading institutions, and strengthen information sharing and cooperation in law enforcement.

Carbon emission trading should gradually be integrated into a unified public resource trading platform system.

Article 6: The types and industry scope of greenhouse gases covered by carbon emission trading shall be proposed by the competent ecological and environmental department of the State Council in conjunction with relevant departments such as the State Council's development and reform in accordance with the national greenhouse gas emission control goals, and shall be implemented after approval by the State Council.

Carbon emission trading products include carbon emission quotas and other spot trading products approved by the State Council.

Article 7: Key greenhouse gas emitting units (hereinafter referred to as key emitting units) included in the national carbon emission trading market and other entities that comply with relevant national regulations may participate in carbon emission trading.

The staff of the ecological environment regulatory department, other departments responsible for supervision and management of carbon emission trading and related activities (hereinafter referred to as other departments responsible for supervision and management), the national carbon emission registration and registration agency, the national carbon emission trading agency, and the technical service agency specified in this regulation shall not participate in carbon emission trading.

Article 8: The competent ecological and environmental department of the State Council, in conjunction with relevant departments of the State Council, shall formulate the conditions for determining key emission units in accordance with the national greenhouse gas emission control targets. The ecological and environmental competent departments of the people's governments of provinces, autonomous regions, and municipalities directly under the central government (hereinafter referred to as the provincial people's governments), in conjunction with relevant departments at the same level, shall formulate an annual list of key emission units in their respective administrative regions in accordance with the conditions for determining key emission units.

The conditions for determining key emission units and the annual list of key emission units shall be made public to the society.

Article 9: The competent ecological and environmental department of the State Council, in conjunction with relevant departments of the State Council, shall, based on the national greenhouse gas emission control goals, comprehensively consider factors such as economic and social development, industrial structure adjustment, industry development stage, historical emission situation, market regulation needs, etc., formulate the total amount and distribution plan of annual carbon emission quotas, and organize their implementation. Carbon emission quotas will be allocated for free, and a combination of free and paid allocation will be gradually implemented in accordance with relevant national requirements.

The ecological and environmental management department of the provincial people's government, in conjunction with relevant departments at the same level, shall issue carbon emission quotas to key emission units within its administrative region based on the total annual carbon emission quota and distribution plan, and shall not issue or adjust carbon emission quotas in violation of the total annual carbon emission quota and distribution plan.

Article 10: In accordance with the provisions of Article 6, Article 8, and Article 9 of these Regulations, opinions from provincial-level people's governments, relevant industry associations, enterprises and institutions, experts, and the public shall be solicited when studying and proposing the types and industry scope of greenhouse gases covered by carbon emission trading, determining conditions for key emission units, and the total amount and distribution plan of annual carbon emission quotas.

Article 11 Key emitting units shall take effective measures to control greenhouse gas emissions, formulate and strictly implement greenhouse gas emission data quality control plans in accordance with relevant national regulations and technical specifications formulated by the competent ecological environment department of the State Council, use measuring instruments that have been legally certified or calibrated to conduct greenhouse gas emission related inspections and tests, and truthfully and accurately calculate the greenhouse gas emissions of their own units, Prepare the greenhouse gas emission report for the previous year (hereinafter referred to as the annual emission report), and submit the emission statistical accounting data and annual emission report to the ecological environment department of the provincial people's government where the production and business premises are located in accordance with regulations.

Key emission units shall be responsible for the authenticity, completeness, and accuracy of their emission statistical accounting data and annual emission reports.

Key emission units shall, in accordance with relevant national regulations, disclose to the public the emission amount, emission facilities, statistical accounting methods, and other information in their annual emission reports. The original records and management ledger of the data involved in the annual emission report should be kept for at least 5 years.

Key emission units may entrust legally established technical service institutions to carry out greenhouse gas emission related inspection and testing, and prepare annual emission reports.

Article 12: The ecological and environmental management department of the provincial people's government shall verify the annual emission reports submitted by key emission units and confirm their actual greenhouse gas emissions. The verification work shall be completed within the prescribed time limit, and the verification results shall be reported to the key emission units within 7 working days from the date of completion of the verification. The verification results should be made public to the society.

The ecological and environmental management department of the provincial people's government may entrust legally established technical service institutions to conduct technical audits of annual emission reports through government procurement of services and other means. Key emission units shall cooperate with technical service institutions to carry out technical audits and provide relevant data and information truthfully.

Article 13 Technical service institutions entrusted to carry out greenhouse gas emission related inspection and testing shall comply with relevant national technical regulations and specifications, bear corresponding responsibilities for the inspection and testing reports issued by them, and shall not issue false or false inspection and testing reports. Key emission units shall produce and submit samples for inspection in accordance with relevant national regulations, and shall be responsible for the representativeness and authenticity of the samples.

Technical service institutions that accept commissions to prepare annual emission reports and conduct technical audits on annual emission reports shall, in accordance with relevant national regulations, possess corresponding facilities, equipment, technical capabilities, and technical personnel, establish a business quality management system, independently, objectively, and impartially carry out relevant businesses, bear corresponding responsibilities for the annual emission reports and technical audit opinions issued by them, and shall not tamper with or forge data materials, It is not allowed to use false data or engage in other fraudulent activities. The specific management measures for the preparation and technical review of annual emission reports shall be formulated by the competent ecological and environmental department of the State Council in conjunction with relevant departments of the State Council.

Technical service institutions are not allowed to engage in both annual emission report preparation and technical audit business within the same province, autonomous region, or municipality directly under the central government.

Article 14 Key emission units shall, based on the verification results of the annual emission report by the ecological environment department of the provincial people's government, fully pay their carbon emission quotas within the time limit prescribed by the ecological environment department of the State Council.

Key emitting units can purchase or sell carbon emission quotas through the national carbon emission trading market, and the carbon emission quotas they purchase can be used for clearing.

Key emitting units can purchase certified greenhouse gas emission reductions in accordance with relevant national regulations for the purpose of clearing their carbon emission quotas.

Article 15: Carbon emission rights trading may adopt agreement transfer, one-way bidding, or other spot trading methods that comply with relevant national regulations.

It is prohibited for any unit or individual to manipulate the national carbon emissions trading market or disrupt the order of the national carbon emissions trading market through fraud, malicious collusion, and dissemination of false information.

Article 16: The competent ecological and environmental department of the State Council shall establish a national carbon emission trading market management platform, strengthen the supervision and management of the entire process of carbon emission quota allocation, payment, and greenhouse gas emissions from key emitting units, and achieve information sharing with relevant departments of the State Council.

Article 17: The competent ecological environment department and other departments responsible for supervision and management may conduct on-site inspections of key emission units, trading entities, and technical service institutions within their respective scope of responsibilities.

The ecological environment supervisory department and other departments responsible for supervision and management may conduct on-site inspections, and may take measures such as consulting and copying relevant materials, querying and inspecting relevant information systems, and may require relevant units and individuals to provide explanations on relevant matters. The inspected person shall truthfully report the situation and provide information, and shall not refuse or obstruct.

Conduct on-site inspections, with no less than 2 inspectors and presenting law enforcement documents. Inspectors shall have the obligation of confidentiality in accordance with the law regarding state secrets and trade secrets that they become aware of during the inspection.

Article 18: Any unit or individual has the right to report any behavior that violates the provisions of this Regulation to the competent ecological environment department and other departments responsible for supervision and management. The department that receives the report shall handle it in a timely manner in accordance with the law, provide feedback on the handling results to the informant in accordance with relevant national regulations, and keep the informant confidential.

Article 19: If the staff of the ecological environment regulatory department or other departments with supervisory and management responsibilities abuse their power, neglect their duties, or engage in favoritism and fraud in the supervision and management of carbon emission trading and related activities, they shall be punished in accordance with the law.

Article 20: If staff members of the ecological environment regulatory department, other departments responsible for supervision and management, national carbon emission rights registration and registration institutions, national carbon emission rights trading institutions, and technical service institutions specified in these regulations participate in carbon emission rights trading, the ecological environment regulatory department of the State Council shall order them to dispose of their carbon emission quotas and other trading products in accordance with the law, and confiscate their illegal gains, It is possible to impose a fine of no more than the equivalent price of the traded carbon emission quotas and other products; Those who belong to state employees shall also be punished in accordance with the law.

Article 21: If a key emission unit falls under any of the following circumstances, the competent ecological environment department shall order it to make corrections and impose a fine of not less than 50000 yuan but not more than 500000 yuan; Those who refuse to make corrections may be ordered to suspend production for rectification:

（1） Failure to develop and implement a quality control plan for greenhouse gas emission data in accordance with regulations;

（2） Failure to submit emission statistical accounting data and annual emission reports in accordance with regulations;

（3） Failure to disclose the emission amount, emission facilities, statistical accounting methods, and other information in the annual emission report to the public in accordance with regulations;

（4） Failure to keep the original records and management ledger of the data involved in the annual emission report in accordance with regulations.

Article 22: If a key emission unit falls under any of the following circumstances, the competent ecological environment department shall order it to make corrections, confiscate its illegal gains, and impose a fine of not less than 5 times but not more than 10 times the illegal gains; If there are no illegal gains or the illegal gains are less than 500000 yuan, a fine of not less than 500000 yuan but not more than 2 million yuan shall be imposed; Impose a fine of not less than 50000 yuan but not more than 200000 yuan on the directly responsible supervisors and other directly responsible personnel; For those who refuse to make corrections, their carbon emission quotas for the next year shall be reduced at a ratio of 50% to 100%, and they may be ordered to suspend production for rectification:

（1） Failure to calculate greenhouse gas emissions in accordance with regulations;

（2） The annual emission report prepared has significant defects or omissions, and during the process of preparing the annual emission report, data and information are tampered with or forged, false data and information are used, or other fraudulent activities are carried out;

（3） Failure to produce and submit samples according to regulations.

Article 23: If a technical service institution issues false or false inspection and testing reports, the competent ecological environment department shall order it to make corrections, confiscate its illegal gains, and impose a fine of not less than 5 times but not more than 10 times the illegal gains; If there are no illegal gains or the illegal gains are less than 20000 yuan, a fine of not less than 20000 yuan but not more than 100000 yuan shall be imposed; If the circumstances are serious, the department responsible for qualification recognition shall cancel its inspection and testing qualifications.

If there are significant defects or omissions in the annual emission report or technical audit opinions issued by the technical service agency, and the data is tampered with or forged, false data is used, or other fraudulent activities are carried out during the preparation of the annual emission report or the technical audit of the annual emission report, the ecological environment competent department shall order correction, confiscate the illegal gains, and impose a fine of not less than 5 times but not more than 10 times the illegal gains; If there are no illegal gains or the illegal gains are less than 200000 yuan, a fine of not less than 200000 yuan but not more than 1 million yuan shall be imposed; Those with serious circumstances are prohibited from engaging in the preparation of annual emission reports and technical audits.

If a technical service agency is punished for the illegal acts specified in the first and second paragraphs of this article, its directly responsible supervisor and other directly responsible personnel shall be fined not less than 20000 yuan but not more than 200000 yuan, and shall be prohibited from engaging in greenhouse gas emission related inspection and testing, annual emission report preparation, and technical review business for a period of five years; Those with serious circumstances shall be prohibited from engaging in the aforementioned business for life.

Article 24: If a key emission unit fails to pay its carbon emission quota in accordance with regulations, the competent ecological environment department shall order it to make corrections and impose a fine of not less than 5 times but not more than 10 times the average market transaction price of the carbon emission quota that has not been paid in the month before the deadline for payment; Those who refuse to make corrections shall have their carbon emission quotas for the next year reduced by an equal amount based on the unpaid carbon emission quotas, and may be ordered to suspend production for rectification.

Article 25: Those who manipulate the national carbon emission trading market shall be ordered by the competent ecological and environmental department of the State Council to make corrections, their illegal gains shall be confiscated, and a fine of not less than one time but not more than ten times the illegal gains shall be imposed; If there are no illegal gains or the illegal gains are less than 500000 yuan, a fine of not less than 500000 yuan but not more than 5 million yuan shall be imposed. If a unit is punished for the aforementioned illegal acts, its directly responsible supervisor and other directly responsible personnel shall be given a warning and fined not less than 100000 yuan but not more than 1 million yuan.

Those who disrupt the order of the national carbon emission trading market shall be ordered by the competent ecological and environmental department of the State Council to make corrections, their illegal gains shall be confiscated, and a fine of not less than one time but not more than ten times the illegal gains shall be imposed; If there are no illegal gains or the illegal gains are less than 100000 yuan, a fine of not less than 100000 yuan but not more than 1 million yuan shall be imposed. If a unit is punished for the aforementioned illegal acts, its directly responsible supervisor and other directly responsible personnel shall be given a warning and fined not less than 50000 yuan but not more than 500000 yuan.

Article 26: Those who refuse or obstruct the ecological environment supervisory department or other departments responsible for supervision and management from carrying out supervision and inspection in accordance with the law shall be ordered to make corrections by the ecological environment supervisory department or other departments responsible for supervision and management, and shall be fined not less than 20000 yuan but not more than 200000 yuan.

Article 27: The competent ecological environment department of the State Council, in conjunction with relevant departments of the State Council, shall establish a credit record system for key emission units and other trading entities, as well as technical service institutions. Information on administrative penalties imposed on key emission units and other trading entities and technical service institutions for violating the provisions of this Regulation shall be included in the relevant national credit information system and disclosed to the public in accordance with the law.

Article 28: Those who violate the provisions of this Regulation and cause damage to others shall bear civil liability in accordance with the law; Those who constitute violations of public security management shall be punished for public security management in accordance with the law; If a crime is constituted, criminal responsibility shall be pursued in accordance with the law.

Article 29: Local carbon emission trading markets established before the implementation of this Regulation shall refer to the provisions of this Regulation to improve and perfect relevant management systems, and strengthen supervision and management.

After the implementation of this regulation, no new local carbon emission trading markets will be established, and key emitting units will no longer participate in carbon emission trading in local carbon emission trading markets with the same greenhouse gas types and industries.

Article 30: The meanings of the following terms in these Regulations:

（1） Greenhouse gases refer to natural and anthropogenic gaseous components in the atmosphere that absorb and re emit infrared radiation, including carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride, and nitrogen trifluoride.

（2） Carbon emission quotas refer to the emission quotas allocated to key emitting units for greenhouse gases such as carbon dioxide during the specified period. One unit of carbon emission quota is equivalent to emitting one ton of carbon dioxide equivalent into the atmosphere.

（3） Clearing and payment refers to the act of key emitting units paying carbon emission quotas equivalent to their verified and confirmed actual greenhouse gas emissions from the previous year to the ecological environment regulatory department within the prescribed time limit.

Article 31: Key emitting units that consume non fossil energy electricity shall adjust their carbon emission quotas and greenhouse gas emissions in accordance with relevant national regulations.

Article 32: The competent department of ecological environment under the State Council, in conjunction with the competent departments of civil aviation and other industries under the State Council, may, in accordance with the principles stipulated in this Regulation, formulate a list of key emission units, issue and clear carbon emission quotas for civil aviation and other industries based on actual needs and in combination with the characteristics of greenhouse gas emission control in civil aviation and other industries Develop specific management measures for the statistical accounting of greenhouse gas emission data and the submission and verification of annual emission reports.

Article 33: These regulations shall come into effect on May 1, 2024.