What is: Carbon emission trading rights

The international carbon market can be divided into two main categories: allowance-based trade and project-based trade. 1. Quota trading market: The main objects of trading are the quotas allocated to enterprises by policymakers through initial distribution. Such as the AAU quotas in the Kyoto Protocol, and the EU Emissions Allowances EUA used in the EU Emissions Trading System. 2. Project trading market: The trading entities are primarily emission reduction certificates obtained through the implementation of projects to reduce greenhouse gases; such as Certified Emission Reductions (CERs) generated under the Clean Development Mechanism (CDM) and Emission Reduction Units (ERUs) generated under the Joint Implementation mechanism (JI). Among them, the trading volume of EUETS quotas, spot prices, and their derivatives was the largest, reaching nearly 92 billion dollars in 2008, accounting for over 3/5 of the total global trading volume.

Current status: The EU is at the forefront of the world in promoting emissions trading. The EU’s EU-ETS trading system features a comprehensive set of established trading rules. It establishes a gas emission trading scheme applicable across the European Union, and by determining the greenhouse gas emissions from tens of thousands of installations in specific sectors, it allows emission reduction credits to enter the market, thereby helping to achieve the goal of reducing greenhouse gas emissions. Since the start of trading on the EU carbon emission market, both the volume of trades and the total value of transactions have been increasing steadily.

In October 2011, China’s National Development and Reform Commission issued the \"Notice on Carrying Out Pilot Projects for Carbon Emission Trading,\" approving seven provinces and municipalities—Beijing, Shanghai, Tianjin, Chongqing, Hubei, Guangdong, and Shenzhen—to carry out pilot programs for carbon trading. Over the past two years, under the guidance and support of the **Development and Reform Commission, Shenzhen has actively promoted research and practices related to carbon trading, striving to develop a carbon emission trading mechanism that suits China’s national conditions and features Shenzhen’s own characteristics. It has completed tasks such as system design, data verification, quota allocation, and institutional establishment. On June 18, 2013, the Shenzhen carbon emission trading market became the first among the seven pilot provinces and cities in the country to initiate trading. Over the past six months, Shenzhen’s carbon market has operated steadily, with the city playing a pioneering role in using market mechanisms to achieve low-carbon development. At present, China is making great efforts to develop a green economy, regarding energy conservation and emission reduction as well as the promotion of a low-carbon economy as **important tasks in its development, with the aim of fostering new sources of economic growth that are characterized by low energy consumption, low pollution, and low carbon emissions. According to the 12th Five-Year Plan, the pilot programs for carbon emission trading in the “two provinces and five cities” are set to be fully launched by 2013. The expanded carbon emission trading market has spurred the emergence of new industrial opportunities; services such as carbon auditing, carbon emission trading, carbon management, carbon strategic planning, and carbon finance are set to develop rapidly. For enterprises, carbon emission rights trading is directly related to their profits and operational performance. Companies need to truly understand the advantages and disadvantages of carbon emission trading, enhance their awareness of all the involved aspects, build up a pool of skilled professionals, and adjust their business strategies in order to turn \"risks\" into \"opportunities\". At the same time, carbon assets represent the fourth type of new asset, following cash assets, physical assets, and intangible assets; they will become an important component in the asset allocation of various enterprises and financial institutions in our country. As China’s carbon emission trading market continues to expand and mature, there will be a rapid increase in the demand for new types of professionals with specialized knowledge and skills in this field. As the first carbon market to be launched in the country, the Shenzhen Emissions Rights Exchange has introduced a series of courses on low-carbon education and training, drawing on its actual operating mechanisms and experience. These courses are aimed at cultivating high-level professionals at various levels who are skilled in carbon emission rights trading. By doing so, it helps to ensure the implementation of China’s low-carbon development strategy, while also assisting pilot enterprises, investors, market service institutions, as well as other organizations and individuals interested in getting involved in the carbon emission rights trading industry in seizing these \"carbon opportunities\".

The concept of carbon emission rights trading originated from the idea of emission rights trading proposed by economists in the last century. Emission rights trading is an important environmental economic policy in market economies; the U.S. Environmental Protection Agency was the first to apply it to the management of air pollution and river pollution. Since then, Germany, Australia, the United Kingdom, and others have also successively implemented policies and measures for emissions trading. The general practice in emission rights trading is: **organizations determine the maximum amount of pollutants that can be emitted within a certain area without exceeding the environmental capacity, and divide this amount into several emission quotas, with each quota representing one emission right.** **In the primary market for emission rights, these rights are sold to polluters on a paid basis through methods such as bidding and auctions. Once polluters acquire such rights, they can buy or sell them in the secondary market. Internationally, it is believed that although the Netherlands and the World Bank took the lead in introducing carbon emission trading in 2002, the global carbon emission market actually emerged in 2005. Chinese factories and international carbon emission traders are also reaping huge profits from greenhouse gas emission trading. Chemical plants can earn carbon emission credits by reducing the release of polluting hydrogen fluoride gases into the atmosphere. This credit can be sold on the international carbon emission trading market for $5 to $15. According to industry estimates, the installation cost of scrubber systems used to reduce hydrogen fluoride gas emissions is very low; the cost for typical factories ranges from 10 million to 30 million dollars. Installing such devices can generate millions of carbon emission credits, as hydrofluorocarbons, as a greenhouse gas, are many times more potent than carbon dioxide. Climate Change Capital Company obtained approximately 10,000 certified emission reductions, or carbon emission credits, from Chinese hydrofluorocarbon projects, worth hundreds of millions of dollars. The ultimate buyers of carbon emission credits are developed countries, which have agreed to reduce their greenhouse gas emissions in accordance with the requirements of the Kyoto Protocol. This practice is completely legal, but it also allows factories and enterprises to earn substantial profits through the trading of carbon emission credits.

Recently, **the General Secretary of the CPC Central Committee**, the Premier of the State Council, and **the head of the Leading Group on Climate Change Response and Energy Conservation and Emission Reduction** presided over a meeting of the leading group. **Han Zheng, Member of the Central Leadership Group on *****, Vice Premier of the State Council, and Deputy Head of the Leading Group on Climate Change Response and Energy Conservation and Emission Reduction, attended the meeting. At the meeting, the Ministry of Ecology and Environment and the National Development and Reform Commission delivered reports, and members of the leadership team spoke. **It is said that in recent years, under the **strong leadership of Comrade **** as the core, various regions and departments have actively implemented the new development concepts, achieving significant results in addressing climate change as well as in energy conservation and emission reduction. The intensity of carbon dioxide emissions continues to decline, while the share of non-fossil energy consumption is gradually increasing. Renewable energy capacity accounts for 30% of the global total, and the increase in forest stock has already met the 2030 targets ahead of schedule ； Emissions of major pollutants have decreased significantly, and the quality of the ecological environment continues to improve. Under the new circumstances, it is necessary to adhere to the guidance of **Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era**, and in line with the requirements for promoting high-quality development, to plan comprehensively for economic and social progress as well as efforts to address climate change and achieve energy conservation and emission reduction. This will help optimize and upgrade the economic structure, facilitate the transition from old to new drivers of growth, tap into potential for energy savings, and accelerate the development of an industrial system characterized by green, low-carbon, and circular development. It is also important to strengthen ecological civilization construction, resolutely combat pollution, promote sustainable and healthy economic and social development, and continue to make due contributions to the global effort to address climate change challenges. **It is pointed out that our country is the largest developing ** in the world, and the problems of unbalanced and inadequate development remain prominent. We will continue to make extraordinary efforts to fulfill our commitment to the international community to reach a peak in total carbon dioxide emissions around 2030 and achieve a significant reduction in their intensity. At the same time, we are willing to work together with the international community to uphold the principles of common but differentiated responsibilities, equity, and respective capabilities, strengthen cooperation, jointly safeguard the United Nations Framework Convention on Climate Change, the Paris Agreement and its implementation rules, ensure that multilateral climate change negotiations fully reflect the demands of developing countries, and promote global climate governance toward a more equitable, rational, and cooperative path that yields mutual benefits. **It was said that all departments should work together to advance efforts in energy conservation and emission reduction. First, we must focus on key areas by vigorously promoting clean industrial production and energy conservation and emission reduction in transportation. We should advance energy-efficient renovations of buildings in old urban residential areas, and continue to develop clean energy sources such as hydroelectric, wind, and solar power. Continue to push for ultra-low emission upgrades in coal-fired power plants and steel production facilities, ensure that industrial furnaces meet emission standards, and accelerate the improvement of infrastructure gaps in areas such as sewage and waste treatment. Carry out extensive nationwide campaigns for energy conservation, emission reduction, and low-carbon living. Second, it is necessary to develop and strengthen the energy-saving and environmental protection industry, improve the efficiency of energy conservation and emission reduction, and foster new growth points. Accelerate breakthroughs in key technologies in the fields of clean energy and low-carbon development, strengthen the manufacturing industry for energy-saving and emission-reduction equipment, and vigorously promote contract management services for energy conservation and emission reduction. Promote public institutions such as ** to implement a mandatory procurement system for energy-efficient products. Third, more emphasis should be placed on using economic policies, regulations, and standards to stimulate the internal motivation of all parties to reduce energy consumption and emissions, avoiding simplistic approaches and one-size-fits-all solutions. Improve mechanisms such as pricing to promote green development, and expand the successful experiences of electricity pricing for desulfurization and denitrification. Increase support for green finance. Implement effectively the tax incentives related to promoting energy conservation and emission reduction. Accelerate the establishment of markets for energy use rights, pollution discharge rights, and carbon emission rights. Establish a long-term mechanism for energy conservation and emission reduction.