China's Emission Target Policy Framework: Top-level Plan for Statistical Accounting System

The "Implementation Plan on Establishing a Unified and Standardized Emission Statistical Accounting System" issued by NDRC, NBS, and MEE in August is a key basis for China's emission evaluation, assessment, and international negotiation. The "Plan" specified four key tasks of national and local government, industrial enterprises, and product emission accounting, as well as the compilation of national greenhouse gas inventories during the 14FYP period (2021-2025).

SUMMARY

• The Plan is one of the core components of China's 30-60 Emission Target 1+N Policy Framework and plays the role of the master plan for emissions accounting. NDRC and NBS are the coordinating departments. The goal is to establish a collaboration mechanism by 2023, while key industries should carry out substantial work for emission statistics and accounting.
  
  
• The policy title highlights "unified and standardized" as the keywords, echoing the unified national market initiative from a wider scope of economic activities.
  
  
• It has unified leadership by the Peak Emissions and Carbon Neutrality Working Group, with specified responsibility for multiple departments and smooth working mechanisms.
  
  
• Four key tasks: for national and provincial level, industrial enterprises, key products, as well as to improve national greenhouse gas(GHG) inventory;
  
  
• Consistent parameter standards: to establish a database of emission factors and update it on a regular and standardized basis.
  
  
• China's currently applicable emission accounting system was initiated during the 12FYP period (2011-2015), which mainly includes accounting trial methods and reporting guidelines for 24 key industries and provincial GHG inventory compilation handbooks. The revision work of the accounting guidelines for key industries was launched in 2021, among which the revision for the power generation industry has been completed. (email us for the Appendix "China's Carbon Emission Statistical Accounting Policy Roadmap")
  
  
• Carbon emission statistics and accounting work is the groundwork for national ETS expansion.
  
  

Four Key Tasks: To Form a Unified Emission Statistical Accounting System

Levels of Emission Accounting: Government, Industry, and Product

• Regional emissions accounting: total CO2 volume and intensity (emissions per unit of GDP), which links to national/local government KPI assessment. The current mechanism uses a rough calculation of fossil fuel emission factors based on standard coal consumption.
  
  
• Emissions accounting by industry is the basis for emission accounting in national and local ETSs, and the current mechanism mainly refers to the accounting methods and reporting guidelines for 24 industries issued in 2013-15. Government departments should revise the guidelines for eight key emission-intensive industries, including building materials, steel, non-ferrous metals, petrochemicals, and chemicals.
  
  
• Product accounting: The Plan prioritizes raw materials and semi-finished products. In the context of cross-border carbon tariff initiatives, follow-up tasks should focus on product carbon footprint assessment and international mutual recognition.
  
  
• National greenhouse gas inventory: It is the data basis for evaluating the Nationally Determined Contributions (NDC) of the UNFCCC, and the accounting should be in line with international standards.
  
  

Emissions Statistical Accounting: Groundwork for National ETS Expansion

• MEE issued a notice in March requesting that companies in key industries - following the power generation sector - to file annual GHG emission reports for 2021 (righthand table); the reporting threshold is the same as for the power sector: GHG emissions >= 26,000 tonnes of CO2e (or total energy consumption above 10,000 tonnes of standard coal) in either year of 2020 and 2021.
  
  

Schedule:

• Before 30 Sep. 2022: To prepare emissions accounting and reporting documents for emissions in 2021;
  
  
• Before 31 Dec. 2022: To Complete verification works of annual emissions reports for 2021.
  
  

Petchem and Chemical Sectors Account for 12% of China's Emissions

• China's petrochemical and chemical industry had total carbon emissions of 1,384 million tonnes in 2020, accounting for about 12% of total carbon emissions (according to CPCIF). As new capacity keeps expanding, the sectors' emissions will continue to increase before reaching a plateau level in the near future.
  
  
• Of the emissions from the petrochemical and chemical industries, 924 million tonnes (about 67%) were directly emitted and 460 million tonnes (about 33%) were emissions from power use. Emissions from key products are 998 million tonnes, accounting for about 72% of the petrochemical and chemical industry.
  
  
• In 2020, China's petrochemical and chemical industries consumed a total of 685 million tonnes of standard coal, ranking fourth in China's industrial sectors, following the power, steel, and cement industries.
  
  
• There were about 2,300 enterprises with a total energy consumption of more than 10,000 tonnes of standard coal. Those are expected to be included in the national ETS.
  
  
• Four types of emissions are included in corporate accounting reporting guidelines for the petrochemical and chemical sectors (as the following table shows).
  
  
• The scope of emission facilities in the plant includes production systems, affiliated production systems (heating, power supply, and transportation in the plant, etc.), and service facilities (office, canteen, living facilities, etc.).
  
  

Written by the GL Consulting team (Mysteel's consultancy arm on energy transition): glconsulting@mysteel.com

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.