The scheme’s expansion to include the steel, cement, and aluminum smelting industries increases the program’s coverage to 60% of China’s total greenhouse gas emissions.
By Paul A. Davies, JP Brisson, Michael Green, and Qingyi Pan
On March 26, 2025, China’s Ministry of Ecology and Environment (the MEE) published the “Work Plan for the National Carbon Emissions Trading Market Covering the Steel, Cement, and Aluminum Smelting Industries” (the Work Plan).1 The Work Plan expands the scope of
The Standards provide a framework for all Chinese companies’ sustainability disclosures and the applicability extends beyond listed companies.
By Paul A. Davies, Farhana Sharmeen, Michael D. Green, James Bee, and Qingyi Pan
On May 27, 2024, China’s Ministry of Finance published the new Corporate Sustainability Disclosure Standards (Draft for Comment) (the Standards). The Standards set out the general provisions, disclosure objectives, and information quality requirements, which aim to lay the ground for China’s unified national sustainability disclosure standard system, expected to launch by 2030. The goal of the Standards is to promote transparent disclosure throughout the value chain and to enhance the competitiveness of Chinese companies globally.
The regulations aim to provide a legal framework for China’s carbon allowance trading market by strengthening requirements and designating responsibilities.
By Hui Xu, Paul A. Davies, Jean-Philippe Brisson, and Qingyi Pan
On January 25, 2024, Chinese Premier Li Qiang signed a decree of the State Council, introducing the Regulations on the Administration of Carbon Allowance Trading (the Regulations). Effective from May 1, 2024, the Regulations provide a legal framework for the operation of China’s emissions trading scheme
The draft New Measure aims to enhance the environmental integrity of China’s carbon market by introducing new requirements for project registration and credit issuance.
By Paul A. Davies, Jean-Philippe Brisson, Michael Dreibelbis, and Qingyi Pan
China is preparing to relaunch its carbon credits program, the Chinese Certified Emission Reduction (CCER) Scheme, after suspending the program for over six years. On July 7, 2023, the Ministry of Ecology and Environment (MEE) and the State Administration for Market Regulation (SAMR) of the People’s Republic of China jointly released the draft Measure for the Administration of Voluntary Emission Reduction Trading (the New Measure).
The public consultation for the draft New Measure ended on August 6, 2023, and on September 15, 2023, the MEE ministry conference reviewed and passed the New Measure in principle. The formal release is expected to happen in October 2023, upon which the New Measure would replace the previous set of rules and become the governing law of the CCER Scheme.
Together with the national emission trading scheme (the China ETS) launched two years ago, the CCER Scheme represents China’s continuous efforts towards adopting market-based mechanisms for achieving its climate pledges (peaking emissions before 2030 and reaching carbon neutrality before 2060).[i]
Corporate reporting (including SEC developments), climate change, energy transition, supply chain management, and the mitigation of ESG-related litigation risk are expected to be the leading ESG themes of this year.
By Paul Davies, Nicola Higgs, Sophie Lamb QC, Ryan Maierson, Colleen Smith, Michael Green, Edward Kempson, James Bee, and Anne Mainwaring
As expected, 2021 saw continued emphasis on environmental, social, and governance (ESG) issues on a global scale, by governments, regulators, NGOs, the private sector, and other important stakeholders. Indeed, 2021 has been variously described as “a watershed moment for ESG” and “the year of ESG investing”[1]. We do not expect this interest to recede, and given the societal importance that now appears to be placed on ESG issues, we expect this growth trend to continue throughout 2022.
This third instalment of Latham’s annual 10 Things to Look Out For blog post highlights the ESG-related developments and trends that we expect to remain in the headlines in 2022.
The People’s Bank of China announced a collaboration with the European Union to adopt a common taxonomy for green investments.
By Paul A. Davies, Nicola Higgs, and Edward R. Kempson
On 21 March 2021, the People’s Bank of China (PBC) announced that China is working with the European Union to adopt a common green taxonomy across the two markets later this year. PBC Governor Yi Gang, speaking at the China Development Forum, said strengthening the nation’s green finance system was the central bank’s priority for the next five years.[1] He emphasised that, in order for China to meet its 30/60 goal of peaking carbon emissions by 2030 and achieving carbon neutrality by 2060, China needs to engage in collaboration with global partners.
The EU Taxonomy Regulation,[2] which entered into force in July 2020 and will take effect on a phased basis from 1 January 2022, is one of the most significant developments in sustainable finance to date. It creates a classification system for environmentally sustainable economic activities and aims to provide clarity as to what should be considered “green”. The EU Taxonomy Regulation is intended to avoid issues of greenwashing and is considered to be an important tool in implementing the Paris Agreement climate goals. For more details on the EU Taxonomy Regulation, please refer to our blog post on the topic.
New trade arrangement incentivizes power operators to be more energy-efficient.
By Paul A. Davies, R. Andrew Westgate, Qingyi Pan, and Jacqueline J. Yap
On January 1, 2021, the long-awaited China Emissions Trading Scheme (ETS) commenced operation, with 2,225 coal-fired power plants participating. Under this new ETS, China’s power operators will have to buy emissions permits if their coal plant exceeds carbon intensity benchmarks, giving power operators an incentive to improve efficiency. Since 2011, China has developed pilot emissions trading platforms in nine cities and provinces, paving the way for a national trading scheme that was first announced in 2017, along with an emissions trading market development plan for the power generation sector. After almost four years of development, the first annual compliance cycle officially began on January 1. China’s Ministry of Ecology and Environment (MEE) has published several policy documents on the national ETS that establish regulatory authority and specify general rules for key areas of market operation and design, including the Carbon Emissions Rights Trading Regulations (Trial), which was published in November 2020.
President Xi Jinping promises to reduce carbon emissions in speech before the UN General Assembly.
By Paul A. Davies, Michael D. Green, R. Andrew Westgate, and Jacqueline J. Yap
On 22 September 2020, during a speech before the UN General Assembly, President Xi Jinping announced China’s commitment to become carbon neutral by 2060 and reaffirmed China’s commitment under the Paris Agreement to peak its carbon emissions by 2030. China is the world’s largest greenhouse gas (GHG) polluter and emitted approximately 10 billion tons of carbon dioxide in 2018, according to the Global Carbon Project. Given this, China’s commitment to become carbon neutral by 2060 would significantly reduce global GHG emissions and set the stage for China’s development of a green economy.
As China begins to implement its emissions trading system, the country may look around the globe for regulatory guidance.
By Paul A. Davies and R. Andrew Westgate
China established its national emissions trading system (ETS) as a key component of the plan to meet its commitments under the Paris Agreement. The country’s participation in the Paris Agreement is significant not only because it contributes 15% toward total global carbon emissions, but because China was a key proponent of the agreement during its negotiation.
China’s initial hurdle was how to systematically collect the emissions data necessary to design and implement the emissions trading scheme. Accurate and comprehensive emissions data is critical not only for setting the level of the overall cap, but also in determining how free allowances will be allocated to regulated companies. Determining the rate at which the emissions cap declines also requires predicting future emission rates and market demand levels.
By Paul Davies and Michael Green
The Vice-President of the European Investment Bank, Jonathan Taylor called for “a renewed effort from the world’s financial institutions to make the Paris Agreement a reality” at the COP 22 Conference, held last month in Marrakesh.
Green finance will have an instrumental role to play in the transition of countries to a low carbon economy. Indeed, sovereign green bonds have been described by financial analysts as “the perfect financial vehicle” and “missing link” to enable signatories to finance their sustainable infrastructure.
There have been a number of notable developments in green finance in recent months, sustaining its momentum.