Client Alert - Gide Loyrette Nouel
Client Alert - Gide Loyrette Nouel
Client Alert - Gide Loyrette Nouel
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3.<br />
• The Pilot Regions will control the overall emission credits within their administrative divisions and establish rules<br />
for credit allocation among local enterprises.<br />
• The regime to monitor and register carbon trades is also to be established locally.<br />
• Other supporting rules related to the carbon market, such as evaluation methods, will be clarified.<br />
In practice, the Pilot Regions now have their own trading platforms, which mainly provide transactions on<br />
environmental protection technology, energy efficiency technology and carbon credits. However, there have not yet<br />
been many successful precedents on carbon emissions trading because such trade is still voluntary for companies.<br />
We have identified two important precedents:<br />
• On 5 August 2009, Tianping Auto Insurance Co., Ltd. purchased credits equivalent to 8,026 tons of carbon<br />
emissions from the Beijing Environment Exchange 7 to compensate for the carbon emissions from its daily<br />
operations since 2004. It was the first known example of a Chinese company buying credits to offset its<br />
emissions.<br />
• On 11 November 2011, Shanghai Hongtai Real Estate Co. Ltd. purchased 2,012 tons of carbon credits from<br />
Shanghai Medical Instruments (Group) Co., Ltd. through the Shanghai Environment Energy Exchange 8 at the<br />
price of RMB 38 per ton to offset emissions from its Pujiang International Finance Plaza project.<br />
A STEP IN THE RIGHT DIRECTION<br />
The essential idea behind the carbon market is to promote energy efficiency by placing a monetary value on<br />
emissions. China has already been widely involved in international CDM projects, and it is now embracing for the<br />
first time the establishment of a viable carbon market within its national policies. Several Pilot Regions have begun<br />
introducing measures to test the carbon market, and such progress will likely have an impact on most industrial<br />
enterprises in the future.<br />
However, the Chinese domestic carbon market is still in its infancy and its complete implementation is still some<br />
years away. To date, carbon trading remains voluntary for enterprises, with the couple of successful precedents<br />
considered more as shows of corporate responsibility, rather than a routine and daily part of business operations.<br />
GLN will closely follow any legal developments relating to China's carbon market. Meanwhile, please contact us<br />
should you have any questions regarding environmental and energy laws and foreign investment in China.<br />
________________________<br />
7 The Beijing Environment Exchange was established on 5 August 2008 and operates under the direction of the National Lead Working Group for<br />
addressing Climate Change, Energy Conservation and Emissions Reduction. The Exchange lays a foundation for China to use market-based methods<br />
to solve problems relating to environmental protection, energy conservation and emissions reduction.<br />
8 The Shanghai Environment Energy Exchange, also set up on 5 August 2008, is mainly engaged in transactions concerning intellectual property rights<br />
(patents) to be transferred from foreign investors and equity to be transferred from local companies in which joint ventures are created. The Exchange<br />
offers a package of services for project developers, such as preparation of the project design, project appraisal, business planning, marketing, funding,<br />
and financial and technological support.<br />
<br />
This <strong>Client</strong> <strong>Alert</strong> was prepared by our China Green Energy Working Group - a cross-border, cross-disciplinary group<br />
focusing on legal issues and developments affecting foreign investment in the green energy sector in China. For<br />
further information, please contact one of our experts below.