State Council, Guiding Opinions on Further Promoting the Pilot Project for the Use for Consideration and Trading of Emission Rights

Issued: August 6 2014

Main contents: The pilot regions (Tianjin, Hebei, Inner Mongolia and eight other regions) are required to comprehensively complete initial determination of the emission rights of the existing pollutant emitting entities by the end of 2015, with subsequent determination carried out, in principle, once every five years (Article 4). The system for the use for consideration and trading of emission rights will essentially be established in the pilot regions by 2017 (Article 2). Pollutant emitting entities shall secure emission rights either by payment of a use fee or through trading. During the specified period of time, a pollutant emitting entity will have the right to use, transfer and mortgage the emission rights. Entities that have secured emission rights with consideration may not be exempted from pollutant emission fee payment obligation according to law (Article 5).

For emission rights secured by trading, in principle, existing pollutant emitting entities shall secure the emission rights at fixed prices set by relevant government authorities according to the pollution treatment cost, degree of scarcity of the resource, level of economic development and other such factors of the pilot region. Emission rights of new construction projects and new emission rights of restructuring or expansion construction projects, in principle, shall be secured through open auctions (Article 6).

Trading of emission rights, in principle, shall be conducted within each pilot province. Trading of emission rights involving water pollutants shall be conducted within the same drainage area only. Emission rights of industrial pollutant sources and agricultural pollutant sources may not be traded against each other (Article 9).