Emerging CCER Scheme Promotes Carbon Neutrality

ZHAO YANG

The CCER scheme is a vital channelthat is helping China achieve carbonneutrality. It is also promoting thedevelopment of the carbon marketand low-cost emission reduction.

THE China Certified Emission Reduction（CCER） scheme is a vital channelthat is helping China and its enterprisesachieve carbon neutrality.At the same time， it is also promoting thedevelopment of the carbon market and lowcostemission reduction. Since an interimadministrative document on voluntarygreenhouse gas emission reduction tradingwas issued in 2012， a relatively complete operatingand management system has beenestablished and a constant flow of tradinghas been carried out.

Ten Years

“The CCER scheme was inspired bythe EU carbon market. China mainlyparticipates in the market through theClean Development Mechanism， one ofthe three flexible compliance mechanismsthat were introduced by theKyoto Protocol， to trade emission reductionsfrom renewable energy projectsthat meet the standards，” said LiuJiapei， director of the Power MarketingDepartment of China General NuclearPower New Energy Holdings Co.， Ltd.（CGN New Energy）， a subsidiary of ChinaGeneral Nuclear Power Corporation（CGN）.

With its commitment to clean energy，CGN entered the EU market backin 2007 with an annual revenue of tensof millions of RMB. According to Liu，participating in the EU carbon marketplayed a specific role in stimulatingChinas development of renewableenergy. China has been piloting its carbontrading market since 2013， but thenumber of projects approved duringthe early stage was too large to be absorbedby the limited market capacity.Due to the imbalance between supplyand demand as well as a lack of standardizationof individual projects， relevantdepartments announced in March2017 the suspension of accepting CCERprojects for filing and certification ofemission reductions.

Up until October 2023， the Ministryof Ecology and Environment andthe State Administration for MarketRegulation issued a trial administrativedocument on voluntary greenhousegas emission reduction trading. Subsequently，relevant departments andinstitutions began to issue rules andregulations that included such aspectsas project methodology， registrationrules， design and implementationguidelines， transaction rules， and certificationrules. With these policiesand institutional guarantees in place，the long-awaited CCER scheme wasofficially launched on January 22， 2024，with a total trading volume of about375，000 tons and a total turnover ofabout RMB 23.84 million on the firstday.

Zhang Da， an associate professor ofthe Institute of Energy， Environmentand Economy at Tsinghua University，who has been conducting in-depthresearch on the carbon market for along time with his research team， participatedin the evaluation， revision，and selection of CCER methodology， as well as the solicitation of opinions andadvice from experts on some policydocuments.

“The CCER scheme is animportant basic policy toolto help China achieve itscarbon peaking and carbonneutrality goals.”

“The CCER scheme is an importantbasic policy tool to help China achieveits carbon peaking and carbon neutralitygoals，” Zhang said. He believes theCCER scheme will complement themandatory carbon market launchedin 2021 and jointly form a completenational unified carbon market tradingsystem.

According to Zhang， the methodologycurrently used by CCER involvesafforestation carbon sinks， grid-connectedsolar thermal power generation，grid-connected offshore wind powergeneration， and planting mangroves.In the future， more new methodologieswill be introduced to support the de and institutional guarantees in place，the long-awaited CCER scheme wasofficially launched on January 22， 2024，with a total trading volume of about375，000 tons and a total turnover ofabout RMB 23.84 million on the firstday.Zhang Da， an associate professor ofthe Institute of Energy， Environmentand Economy at Tsinghua University，who has been conducting in-depthresearch on the carbon market for along time with his research team， participatedin the evaluation， revision，and selection of CCER methodology， asvelopment of more types of voluntaryemission reductions.

“The launch of the CCER schemealso emphasizes an increase in informationtransparency. The projects andemission reduction information whichare based on new methodologies willbe disclosed in Chinas registration systemand information platform for voluntarygreenhouse gas emission reduction，and the transaction data will bemade public in Chinas trading systemfor voluntary greenhouse gas emissionreduction for inquiries from all walksof life，” Zhang said.

Path of Development

The CCER scheme responds tomarket demands and social voices.“The mandatory carbon market haslaunched trading online for more thantwo years， and the stock of the CCERscheme has been obviously insufficient，”said Zhang. According to statistics，1，315 projects have been completed，and 391 projects have receivedcertification of about 77 million tons ofemission reductions. Of that number，about 60 million tons have been usedto pilot the carbon market and offsetthe settlements and performances ofmarket sharing quota. As of June 2023，the cumulative trading volume of ninetrading institutions across China hasreached 450 million tons. He predictedthat with the gradual expansion of themandatory carbon market in the future，the demand on the CCER schemewill rise even further.

“The CCER scheme has the capacityto mobilize the enthusiasm of enterprises，groups， and individuals invarious industries to reduce their emissions，promote the innovation and developmentof low-carbon， zero-carbon，and carbon-negative technologies. Italso encourages them to play a positive role in raising public awareness of carbonemission reduction and reducingthe total cost of emission reduction，”Zhang added.

According to Liu， the launching ofthe CCER scheme has enabled variousnew energy projects to benefit fromthe carbon market by adding an additionalrevenue channel. In addition， theCCER scheme strictly controls projectstandards and specifications， therebymaintaining a relative balance betweensupply and demand， which is a manifestationof high-quality development.

After more than four decades of development，CGNs business now coversfields including nuclear energy， nuclearfuel， new energy， nuclear technologyfor non-power uses， digitalization，technology-based environmental protection，and industrial finance. AmongChinas power companies， CGN is oneof the first involved in the photovoltaicheating industry and has participatedin the compilation of methodology forgrid-connected solar thermal powergeneration.

Compared with traditional photovoltaicpower generation， solar thermalpower generation has more advantages.“While photovoltaic power generationdirectly converts solar energy intoelectricity， its power energy density issmall and the storage efficiency low，”Liu explained， “Solar thermal power Engeneration，on the other hand， increasesthe conversion of heat energy duringthe intermediate process， which can beunderstood as thermal energy naturallyhas the effect of both energy storageand power generation， and is relativelymore stable.”

However， despite the advantagesof solar thermal power generation，because it has high requirements forregional conditions and the technologyused in it is complex， it had not beendeveloped on a massive scale. Thisresulted in the costs of its technology，raw materials， upstream and downstreamequipment， and operation stillremaining quite high.

In 2018， CGN New Energy beganoperating the first commercial solarthermal demonstration power stationin China， the Delingha power plant inQinghai Province. The challenges itfaced at that time was that there werefew manufacturers in the upstreamand downstream industrial chain， theinvestment was huge， and the dependenceon state subsidies was strong，thus producing relatively low economicbenefits.

These challenges all changed withthe launching of the CCER scheme.According to Lius calculations， a50-megawatt project， running for 2，400hours a year， could reduce carbon dioxideemissions by about 80，000 tons.If it is sold at a price of RMB 60 per tonunder the CCER scheme， the annualincome would reach about RMB 5 million.This in the end would effectivelyimprove the income of the project， andthen promote the development of relatedtechnologies.

Gradual Improvement

Since China officially set its carbonpeaking and carbon neutrality goals，public awareness of this niche industryin the carbon field has greatlyimproved. A growing number of enterpriseshave paid attention to theamount of carbon emissions theymake and carried out carbon neutralityplans. Meanwhile， a number of newprofessions such as carbon traders，carbon asset managers， and carbonverifiers are also emerging， and variousrelevant professional training is in fullswing. “This represents a good start，and everyone has taken the first stepin carbon reduction，” said Liu.

Like CGN， Zhang said after the newsof launching the CCER scheme cameout， many other companies respondedquite positively. There have been heateddiscussions regarding managementmethods of project operation andpolicy documents. Some project ownerswho meet the conditions for theapplication of the new methodologyare also actively preparing for projectdevelopment.

Zhang suggested that enterpriseswho are interested need to familiarizethemselves with the relevant rules assoon as possible， accurately understandthe requirements put forwardby the market， and put in place the requiredconditions. “These include correspondingdocuments and materials，preparation of project development，and data quality compliance，” Zhangsaid， “The Ministry of Ecology and Environment is conducting publicity andtraining in this regard.”

The Ministry of Industry and InformationTechnology issued guidelinesfor the construction of a carbon peakingand carbon neutrality standardsystem in the industrial sector on February4， 2024. By 2025， a standard systemshould be initially established， andmore than 200 standards for carbonpeaking will be formulated， focusingon formulating standards in the fieldsof basic general specifications， greenhousegas accounting， low-carbontechnology， and equipment， and so on，to provide technical support for the industrialsector to carry out carbon assessmentand reduce carbon emissions.

According to plans， a relativelycomplete standardized system will beformed by 2030. Standards for coordinatedcarbon reduction， carbon emissionmanagement， and low-carbonevaluation will also be accelerated， soas to achieve full coverage of standardsin key industries and areas， supportthe comprehensive peaking of carbonemissions in the industrial sector， andgradually shift the focus of standardizationwork to the goal of carbonneutrality.

This guideline has injected new lifeinto the CCER scheme. “For the improvementand smooth operation ofthe CCER scheme， we will continue toactively cooperate with the competentauthorities， continue to pay attentionto the operation of the CCER schemefrom the perspective of scientific research，and provide theoretical andempirical support for its development，”Zhang said. He hopes to share Chinasexperience in developing the CCERscheme with other countries throughinternational academic exchanges， andimprove Chinas influence in internationalcarbon pricing.