China launched the China Certified Emission Reduction (CCER) program on January 22nd, 2024, in Beijing, allowing companies in certain industries to trade their carbon reduction numbers after voluntarily engaging in emission-cutting activities. The China Certified Emission Reductions (CCER) scheme allows quantification and sale of CO2 reductions by projects that include forestry, renewable energy, and methane utilisation. Each credit corresponds to a tonne of CO2 reduction.

Under CCER, carbon-emitting companies compensate credit-holding entities for carbon credits and to offset their own emissions. Qin Yan, lead carbon analyst at London Stock Exchange Group stated that this is a milestone for China’s carbon market construction, the two markets, the national Emissions Trading Scheme (ETS) and the voluntary CCER, will cover enterprises, entities and consumers in the whole society, unleashing the potential of carbon trading in achieving China’s dual carbon targets to accelerate China’s progress in reaching carbon neutrality by 2060.

At present, the trading market is mainly open to entities in four major fields, including afforestation, solar power generation, offshore wind power generation and mangrove planting. Green energy producers can profit by compensating their high operation or maintenance cost by selling carbon credits.

Looking forward, the relaunch of CCER will further activate and expand the coverage of China’s carbon market by allowing more voluntary emission reduction projects to participate in the market-oriented mechanism to reduce emission, increase the carbon market’s volume, and improve market liquidity.