ChinaCarbon.net.cn, 4 December, 2016: As Fujian readies to launch the eight emissions trading pilot in China, provincial regulators have announced that a special committee of market experts will keep a weather eye on trading activities and maintain authority to regulate the market under certain circumstances that could threaten the program.
The special committee will take decision whether or not to regulate the market within two working days if the following conditions occur –
- traded quotas in 10 consecutive days increase or decrease by a certain percentage
- serious imbalance is seen in supply and demand
- liquidity in the market is insufficient and threatens its continuity
- Any other circumstance that can affect the health of the market
The Provincial Economic Information Center (PEIC) will act as the executive hand for regulating the market. The Center may release allowances into the market from a reserve to control prices, or buyback allowances to cut down a surplus. Before releasing allowances from the reserve, the PEIC will declare the schedule, price, quota, purchase application period, and maximum limit of a purchase among other pertinent details. Interested buyers can submit their intent to the trading authorities who will then freeze the trading margin for the transaction. The PEIC will determine the qualification of each applicant and submit a summary to the special committee. Upon approval, the trading authority shall organize the transaction over a period specified by the PEIC, during which the purchasing party will be required to maintain equivalent funds in their transaction accounts. The exchange shall also levy a transaction fee as per price, volume, and service rate of each transaction.
All allowances remaining in the reserve quota will expire at the end of the compliance year.
In case a repurchase is mandated by the special committee, the PEIC will notify the trading authorities of the volume intended for repurchase. The repurchase will be funded by revenues accumulated through distribution of allowances, or if needed from investment funds of the provincial budget.
Forestry offsets declared eligible in Fujian
Emission reduction credits generated through carbon sequestration in forestry projects (FFCER) will be allowed to meet 10% of the annual obligation of entities covered in the provincial scheme. The Provincial Forestry Department is responsible for organization, implementation, coordination, supervision, and management of FFCER projects registered by the Provincial Bureau of Forestry. FFCERs will be approved by the Provincial Carbon Office; making them the second regulatory body which could issue offset credits for use in Fujian. FFCERs must be produced within the province by an independent legal entity as per NDRC guidelines. Only those projects starting after February 16, 2015 qualify for issuance.
Certain CCERs issued by NDRC will also be eligible to meet 5% of an entity’s annual obligation. Criteria for CCER eligibility is restricted to credits generated within the province from non-hydro projects which reduce carbon-dioxide and methane emissions.
Rahul Rana (email@example.com)