China Environmental Law

China Daily reported today that “[t]wo environment and energy exchanges were launched yesterday in Shanghai and Beijing, as the country increases efforts in emission cutting and energy conservation.” 

The Shanghai Exchange, owned by Shanghai United Assets and Equity Exchange (SUAEE), will

• collect, filter and publicize information for the environment and energy-related equity and emission credit trading,
• provide a platform for carbon emission credit trading deals between companies or institutions, and
• provide consultancy, project design and evaluation, fund operation and technical support to equity owners, energy reservation integrators, research companies and investment institutions.

Luo Xinyu, general manager of SUAEE, as quoted by China Daily, stated “[o]verseas companies now can come to China and buy the carbon credit on the exchange.”

The Beijing Exchange, operated by an entity called China Beijing Environment Exchange, will (according to China Daily and the Exchange’s press release)

• promote the exchange of technologies for environmental protection, energy conservation and pollution emission reduction,
• provide a platform for trade of SO2 and COD discharge rights, and
• act as an information service for green house gas emission reduction.

China Daily reports that

The exchange would lay a foundation for China to use market-based methods to solve the problems related to environmental protection, energy saving and pollutant emission reduction.

The Shanghai Exchange appears more focused on trading internationally recognized carbon credits and thus should be a bit more active, at least initially, than the Beijing Exchange.  The latter exchange seems to be more focused on SO2 and COD trading, but since the legal and structural framework is not in place for such trades at the moment (except in very limited pilot programs), there isn’t much of a SO2 and COD market yet.

China Daily reports that Tianjin is also ”planning to set up an environment and energy exchange.”  We’ve noted aborted efforts on this front before.  Presumably there are new moves afoot to get something off the ground in Tianjin.

Clarification:  Additional articles reporting this news noted that while the two newly established exchanges intend to engage in emission trading, neither is yet authorized by the state to conduct such trades, and such authorization must be forthcoming before trading can begin.