my country will launch a carbon fee this year. Large emitters will pay the first carbon fee in 2025 based on their emissions in 2024.
But how to charge carbon fees? How much to charge? The Ministry of Environment released the carbon fee calculation formula for the first time on the 3rd, as well as preliminary plans for charging objects, carbon rights to offset carbon fees, and preferential rates. Among them, the algorithm of "deducting 25,000 metric tons of emissions and then calculating the carbon fee" is full. Amid controversy, environmental groups criticized the move as giving free carbon emission quotas to businesses.
At present, the Ministry of Environment has only released the structure of the bill, and the notice of the draft is yet to be announced. Director of the Climate Agency Cai Lingyi said that relevant measures and carbon fee rates will be finalized in the first quarter of this year.
1. From whom is the carbon fee collected? How is the carbon fee calculated?
According to a briefing by the Climate Agency, carbon fee charging objects must meet two requirements. One is to be identified as "the source of greenhouse gas emissions that enterprises should inventory, register and check" (mostly electricity and large-scale manufacturing), and the other is to be "directly The total emissions and indirect electricity emissions amount to 25,000 metric tons of carbon dioxide equivalent."
The carbon fee calculation method is tentatively determined as deducting 25,000 metric tons from emissions and then multiplying by the carbon fee rate. That is, there is no need to pay for 24,900 tons of emissions, and only 1,000 tons of carbon fees for 25,100 tons of emissions.
The Climate Agency stated that this setting is to avoid setting a threshold of only 25,000 tons, which would create an unfair situation in which "25,100 tons must be paid in full, and 24,900 tons must not be paid at all." Shi Wenzhen, deputy minister of the Ministry of Environment, said that the objects that should be investigated account for about 75% of my country's emissions, but the power industry also needs to deduct consumer electricity emissions. After deduction, it covers my country's 55 to 60% emissions.
As for the calculation after deducting 25,000 metric tons, what is the actual coverage rate? The Climate Agency said it still needs to confirm.
2. How to deduct carbon fees from carbon rights?
According to the preliminary plan, domestic and foreign carbon rights can be used to offset carbon fees. Domestic carbon rights include "voluntary reduction projects", "exchange projects", and "advance projects" for which the Environmental Protection Agency has issued 61 million tons of carbon rights many years ago. Foreign carbon rights refer to Singapore’s practice, limiting the deduction amount to no more than 5%. As for what foreign quotas are available? The Climate Agency stated that it will formulate separate "accreditation criteria".
In addition, the carbon rights deductions for the "early project" are only available in 2024 and 2025. Cai Lingyi explained that it was not issued based on rigorous methodology at that time, but he emphasized that all carbon rights deductions and carbon offset fees are not "1:1". Climate The Department will subsequently determine the deduction ratios for various carbon rights.
3. How can enterprises obtain preferential treatment for carbon reduction?
According to the "Climate Law", businesses that propose "voluntary reduction plans" (including switching to low-carbon fuels, adopting carbon-negative technologies, improving energy efficiency, using renewable energy, and improving manufacturing processes) can receive discounts if they reach certain "specified targets" rates. The Climate Agency stated that the base year data is currently set as the average emissions from 2019 to 2023, and the target year is 2030. However, the actual "specified target" that will allow operators to obtain preferential rates is still under discussion. .
Since the designated target should be consistent with the national reduction target, external discussions may link it to the 2030 Nationally Determined Contribution (NDC) announced at the end of 2022, which is a carbon reduction of 24±1%; or the "third party" stipulated in the "Climate Law" Phase control targets” (2026 to 2030). However, the Climate Agency emphasized that it will set specific targets based on industries and "will not be a single number."
4. Carbon fee method and rate schedule? Climate Agency: The dust has settled on the first quarter
Regarding the timetable related to carbon fees, Cai Lingyi said that social communication is still needed, and she hopes to announce the "carbon fee charging method" and "carbon fee designated reduction targets and independent reduction plan review methods" in the first quarter. As for the carbon fee rate, it will be determined by the "Carbon Fee Review Committee" and will also be announced in the first quarter.
Source: Environmental Information Center
