What impact did the launch of carbon emission trading in 2017 have on the coal chemical industry?

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**NDRC: Ensure the launch of carbon emission trading in 2017 Author/Source: Date: 2016-01-27 Clicks: 333 **Notice from the NDRC Office on Making Effective Efforts to Prepare for the Launch of the National Carbon Emission Trading Market Document No. NDRC Climate 57 In accordance with the relevant decisions made at the Third and Fifth Plenary Sessions of the 18th CPC Central Committee, as well as the requirements set out in the Outline of the 12th Five-Year Plan and the Overall Plan for Reforming the Ecological Civilization System, our commission has been working diligently to develop a national carbon emission trading market, and progress has been made so far. 2016 was a critical period for the development of the national carbon emission trading market. The development and reform commissions of various provinces, autonomous regions, municipalities directly under the Central Government, and the Xinjiang Production and Construction Corps, as well as the Qinghai Provincial Economic and Information Commission (hereinafter referred to as the local authorities), the Civil Aviation Administration, relevant industry associations, and centrally-administered enterprises should all cooperate actively and carry out various tasks in a thorough manner in accordance with **unified arrangements. To this end, the specific requirements for carrying out the key preparatory work prior to the launch are hereby notified as follows: 1. Objectives of the work: In line with the overall requirements for economic system reform and ecological civilization system reform, and with a focus on controlling greenhouse gas emissions and achieving low-carbon development, it is necessary to give full play to the decisive role of market mechanisms in the allocation of resources related to greenhouse gas emissions. By coordinating efforts at the national, regional, and enterprise levels, progress should be made toward establishing a national carbon emission trading market, so as to ensure that the national carbon emission trading system can be put into operation by 2017. II. Work Tasks: The Civil Aviation Administration and local competent authorities shall establish and improve working mechanisms, clarify work requirements, earnestly advance various specific tasks, effectively provide necessary support for the work, and strive to enhance the development of foundational capabilities in the carbon emission trading market. Relevant industry associations and central state-owned enterprises play a leading role, fostering an environment in which key industries and enterprises actively respond to and participate in the national carbon emission trading system. (1) Submit a list of enterprises proposed to be included in the national carbon emissions trading system. The first phase of the national carbon emissions trading market will cover key emitting industries such as petrochemicals, chemicals, building materials, iron and steel, non-ferrous metals, papermaking, power generation, and aviation (for specific industries and codes, please refer to Table 1). The participating entities are initially envisaged to be corporate legal persons or independently accounting business units whose operations involve the aforementioned key industries, and whose total comprehensive energy consumption in any year between 2013 and 2015 reached 10,000 tons of standard coal or more. The Civil Aviation Administration and local competent authorities are requested to organize relevant entities to conduct a survey of enterprises within their jurisdictions that fall under the industries listed in Table 1. By February 29, 2016, they must submit to our Commission a list of enterprises meeting the requirements set forth in this notice; this list will serve as a reference for determining which enterprises will be included in the national carbon emissions trading system. In addition to submitting the list of enterprises proposed for inclusion in accordance with the requirements of this notice, the local competent authorities may, based on the actual situation of enterprises in their respective regions, put forward suggestions regarding additional industries and enterprises that should be included locally. In such cases, please indicate this in the list. To accurately reflect the actual situation of enterprises, relevant industry associations and centrally-administered enterprises are requested to assist in conducting a survey of the enterprises within their respective industries or groups in accordance with the above requirements. They should submit a list of enterprises within their industries or groups that meet the requirements set out in this notice to our commission by February 29, 2016, so that our commission can carry out cross-verification and use this as a basis for determining the list of enterprises to be included in the national carbon emission trading system. (II) Account for, report on, and verify the historical carbon emissions of the enterprises to be included. The Civil Aviation Administration and local competent authorities are requested to promptly organize the preparation of historical carbon emission reports and their verification for the enterprises proposed to be included in the national carbon emissions trading scheme, in accordance with the following procedures. This will provide a basis for our commission to formulate and implement the quota allocation plan under the national carbon emissions trading system in 2016. 1. Enterprise accounting and reporting: Enterprises within the organization’s jurisdiction that are scheduled to be included should, based on their respective industries and in accordance with the requirements set forth in the guidelines for calculating and reporting greenhouse gas emissions by enterprises, which have been issued in phases by our Commission (Documents No. 2526, 2920, and 1722 from the National Development and Reform Commission’s Climate Office), calculate and report their greenhouse gas emissions and related data for the three years of 2013, 2014, and 2015 on an annual basis. In addition, depending on the requirements for quota allocation, enterprises must, in accordance with the template provided in this notice, calculate and report other relevant basic data not covered in the aforementioned guidelines. 2. Third-party verification: After the enterprise completes its accounting and reporting tasks, the local competent authorities select a third-party verification agency to verify the enterprise’s emission data, etc. The basic requirements for such third-party verification agencies and their personnel can be found in the annex to this notice. After conducting the verification, the third-party verification agency must issue a verification report. The procedures for verification and the format of the verification report may be referred to in the attachment to this notice. 3. Review and submission: Enterprises shall submit their emission reports together with the verification reports issued by third-party verification agencies to the local authorities in the area where they are registered. These local authorities will conduct a review, compile the greenhouse gas emission data of these enterprises as specified in the annex to this notice, and submit both the compiled data and the verified emission reports of individual enterprises (including supplementary data) in electronic form to our commission by June 30, 2016. We request that various industry associations and central state-owned enterprise groups provide strong support, actively mobilize the enterprises within their respective industries or groups to attach great importance to the collection and calculation of basic data, strengthen their own team building by assigning dedicated personnel for accounting and management tasks, and help these individuals quickly become familiar with and proficient in the accounting methods and reporting requirements. They should carry out data calculation and reporting in accordance with these requirements, and cooperate fully with third-party verification agencies to facilitate the verification process by providing any necessary assistance. (III) Cultivate and select third-party verification agencies and personnel. Our commission is currently working on formulating regulations for the management of third-party verification agencies. Before the introduction of this measure, local authorities may, in light of their operational needs, conduct an assessment of third-party verification agencies and personnel who possess the necessary capabilities. Under certain criteria, they can identify and select a group of verification agencies that have extensive experience in related fields, possess independent legal status, have sufficient professional staff, and have sound internal management procedures, so as to provide third-party verification services for their respective regions. At the same time, it is necessary to strengthen supervision over verification agencies and verifiers, resolutely prevent any potential conflicts of interest, ensure the fairness of the verification process, improve the qualifications and capabilities of verifiers, regulate the operations of verification agencies, guarantee the quality of verification, and eliminate cutthroat competition among different verification agencies. (4) Strengthen capacity building. Our commission will continue to organize local authorities, relevant industry associations, and centrally-administered enterprises to carry out capacity building in depth, in light of actual work conditions and focusing on all aspects of the national carbon emission trading market. Systematic training plans will be developed for different groups, with tiered training programs organized; emphasis will be placed on training instructors and professional technical personnel. Meanwhile, the role of pilot areas in providing support will be leveraged to ensure a sufficient workforce for the operation of the national carbon emission trading market. For administrative departments, emphasis should be placed on strengthening training in areas such as the top-level design of the carbon emission rights trading market, operational management, the use and management of registration systems, and market supervision ； For the participating enterprises, training is focused on basic knowledge of carbon emission rights trading, carbon emission accounting and reporting, the use of registration systems, market trading, and carbon asset management ； For third-party verification agencies, emphasis should be placed on training related to data reporting and verification ； For trading institutions, training is primarily provided in areas such as market risk management and the integration of trading systems with registration systems. All local authorities, relevant industry associations, and centrally-administered enterprises are requested to follow the **overall plan, actively participate in relevant training activities to improve their capabilities, carefully select candidates for instructor training, and on this basis continue to organize training within their respective regions, industries, and enterprise groups, so as to ensure that relevant personnel at the grassroots level possess the necessary skills. III. Safeguard Measures (1) Organizational safeguards Local authorities should attach great importance to the development of the national carbon emissions trading market, and earnestly strengthen organizational leadership over related efforts within their jurisdictions. Establish a working mechanism in which the competent authority takes responsibility and multiple departments cooperate with each other ； Support the competent authorities in appointing dedicated personnel to handle carbon emission rights trading. These personnel should be responsible for formulating implementation plans, specifying task allocations, setting timelines, and coordinating the implementation and advancement of all specific tasks. State-owned central enterprise groups should strengthen internal coordination and centralized management of carbon emission control efforts, designate specific departments responsible for this task, streamline internal management mechanisms, establish group-level carbon emission management systems, and develop plans for the enterprises to participate in the national carbon emission trading market. (II) Financial support: Local authorities are requested to secure the necessary funds for establishing a carbon emission trading market. Efforts should be made to allocate special funds specifically for activities related to carbon emission trading. In addition, it is also necessary to actively pursue international cooperation and use the funds from such cooperation to support foundational tasks such as capacity building. Each central state-owned enterprise group should provide financial support to help the enterprises within its group strengthen carbon emission management, and support activities such as capacity building and data submission. (III) Technical support: Local authorities should give priority to supporting institutions with technical capabilities, establish technical support teams, and provide technical assistance for the formulation and implementation of relevant policies and measures. Industry associations should leverage their own network channels and technical expertise to actively provide support for enterprises in their respective industries to participate in the national carbon emission trading market. They should collect and convey to relevant authorities the problems encountered by these enterprises in participating in this market, as well as any relevant suggestions, thereby helping to improve the rationality and practicality of relevant policies. To strengthen support for local areas, our commission has specifically established a technical Q&A platform for carbon emission reporting and verification. Through this platform, experts are organized to provide unified responses to relevant typical issues. Relevant parties can register and log in online to consult on various technical issues related to the calculation and verification processes.