Compliments of Reuters
China will ban firms responsible for auditing carbon dioxide emissions and offset projects from trading on a national carbon market due to be launched in 2017, according to new government guidelines aimed at increasing the credibility of the verifiers.
Tens of thousands of firms will have to participate in the nationwide emissions trading scheme (ETS) from next year, and third-party agents need to verify their carbon emission levels as well as the offsets allowed on carbon mitigation projects.
China is the world’s biggest emitter of climate-warming greenhouse gases and it has vowed to make use of market mechanisms to bring carbon dioxide levels to a peak by around 2030, but the accuracy of its data has been questioned.
Amid concerns about the independence of verification firms, China’s top economic planner, the National Development and Reform Commission (NDRC), said it would ban them from trading and from managing the carbon portfolios of market participants.
China has already accredited nine organizations to verify emissions reports for projects capable of generating offset credits tradable on the seven pilot regional carbon markets. But provincial governments have also allowed hundreds of local agents to assist in carbon auditing, many involved in trading.
“Such agents have breached the independence of data reporting,” said a carbon project developer who did not want to be named.
To improve the credibility of the verifiers, the NDRC also said they should not hire staff who have worked in companies being audited at any time during the previous five years.
It has not been decided how many agents will be approved. China has set a capital threshold of 5 million yuan ($760,098) for private firms, who must also have at least 10 staff members with experience in carbon-related projects.
Companies consuming more than 10,000 tonnes of standard coal in any year between 2013-2015 have been obliged to submit emissions data, and the biggest emitters will join the national trading scheme in 2017.
China’s carbon market is likely to be the world’s biggest ETS once it is launched. Officials are sticking to the 2017 launch date, though Reuters Point Carbon expects China may need another two years to develop a national market, citing legislative bottlenecks and the difficulties in integrating the existing pilot markets.