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China calls for nationwide, standardized emission accounting and verification system


Focus on methodology development for power, industrial sectors

To complete general framework by 2023

Prioritizes support for meeting domestic climate targets

China has called for accelerating the development of a nationwide, standardized emission accounting and verification system, prioritizing the nation's most emission-intensive power and industrial sectors, according to an action plan published by the central government.

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The action plan was jointly released by China's top economic planner National Development and Reform Commission, the Ministry of Ecology and Environment, or the MEE, and the National Bureau of Statistics.

The action plan required related authorities and industrial associations to collectively complete the general emission accounting and verification methodology framework by 2023, and upgrade it to a comprehensive system by 2025, which is capable of providing a reliable and scientific foundation for the nation's carbon peaking and carbon neutrality.

Currently, there is no up-to-date, uniform guidelines for the nation's emission-intensive industrial sectors to conduct emission accounting and verification, for both Scope 1 (direction emissions) and Scope 2 (indirect emissions from purchased electricity).

To address such issues, this action plan emphasized prioritizing the standard and methodology developments for industrial sectors including steel, non-ferrous metals, building materials, refining and petrochemical, and chemicals sectors.

According to the MEE's arrangement, all the sectors above are expected to be enrolled into China's national compliance carbon market by 2025. The yet-to-establish emission accounting standards for these industries are one of the key reasons behind the delay in China's carbon market expansion, besides the ongoing economic downturn, COVID-19 rebound and power crisis.

The Chinese government also committed in the action plan that, by 2023, the roles and responsibilities of different government bodies will be sorted out regarding carbon emission management, and a well-coordinated supervisory system will be established.

Before this plan was released, there was no clear division of the various roles played by the central government, which hindered the standard formulation and carbon market development.

Meeting global standards

The action plan also targeted prioritizing the development of "practical and mature" emission accounting and verification methods for electricity, and "key industrial material, in-process and finished products," including iron and steel, electrolytic aluminum, cement, lime, plate glass, refinery products, ethylene, synthesis ammonia, calcium carbide, methanol, and coal chemical industry's products.

The purpose for prioritizing these products was not specified in the action plan, while the plan mentioned that this nationwide, standardized emission accounting and verification system should "be capable of meeting global standards."

The products highlighted in the plan saw some overlaps with the scope of products to be covered under the EU cross-border adjustment mechanism, or CBAM, which charged carbon taxes on the EU's imported goods.

Based on the EU's plan, CBAM is likely to cover iron and steel, cement, fertilizer, aluminum, and electricity generation. The EU has targeted initiating a reporting system from 2023 for the products above to enable a smooth rollout and facilitate dialogues with exporting countries.

As of Aug. 22, EU Emission Allowance for the nearest December was priced at Eur93.041/mtCO2e ($92.50/mtCO2e), according to Platts assessments by S&P Global Commodity Insights.

The daily weighted average price of China Emission Allowance was Yuan 58/mtCO2e ($8.47/mtCO2e) Aug. 22, official exchange data showed.