Climate Legislation in Asia 

Everything you need to know about Climate Legislation in Asia.

China

China has committed to achieving carbon neutrality by 2060. Intending to generate 1,200 gigawatts of renewable energy by 2025, China is by far the global leader in solar and wind power production (1). By 2030, China intends to supply ⅓ of its power consumption from renewable sources. China’s resolute investment in the construction of renewable energy conductors maintains their pursuit of their climate goals (2). China’s most important climate policy that affects corporations is their Emissions Trading Scheme.

Emissions Trading Scheme (3)

The ETS was implemented to mitigate greenhouse gas emissions in the power sector through utilizing a cap-and-trade system. In this system, corporations in the power sector are allocated a certain amount of emission permits and can trade these permits with a cap on total allocation. This scheme has a bottom-up cap, so the cap is the sum of the total allowance allocation to all covered entities, which was 4,500 tons of CO2 in 2021.

What’s the Legislation Timeline?

• ETS was revised in 2021 included clause that all corporations subject to the ETS will have to publicly disclose their carbon emissions (4)
  • Specifically to monitor and report their emissions data

What Companies are Affected?

• Over 2,000 companies from the power sector with annual emissions of more than 26,000 tons of CO2, are affected, including combined heat and power, as well as captive power plants in other sectors

Financial Penalties for Non-Compliance?

• Currently, fines for failing to submit a report are CNY 10,000-30,000 ($1,484–$4,453), while fines for failures in compliance obligations are CNY 20,000-30,000 ($2,969-$4,453). Any gap between the compliance obligation and allowances surrendered also would be deducted from the following yearʼs allocation.

India 

As one of the fastest growing economies in the world, Indian climate policy is incredibly important to ensure that growth can be decoupled from increased emissions. India has committed to be net-zero by 2070 and to have 50% of its electricity generated from renewable energy sources by 2030. Currently, 40% of their electricity is generated from clean energy as India is making significant investments in the construction of renewable energy sources, including green hydrogen (5). Overall, the Indian government is introducing ample legislation to promote its climate goals. 

Cap and Trade System (6)

India is currently in the first stage of implementing a cap-and-trade system. It will be partially modeled off of the EU Emissions Trading Scheme, but has a longer timeline before it’s fully phased out. Initially, the Indian government plans to establish a carbon credits market through cultivating demand and increasing the supply by developing and validating emissions reduction projects. After this voluntary carbon credits market is established, the government plans to issue a mandatory cap-and-trade system with restrictions on carbon emissions designated to sectors and corporations though there is an unclear timeline. 

What’s the Legislation Timeline?

• A draft blueprint was published in October of 2021
• In July 2022, the parliament published a bill establishing the framework for a carbon credit trading scheme, initiating the first stage of this system with the construction of a voluntary carbon credits market

What Companies are Affected?

• Likely corporations in the power sector will be affected (7)

Financial Penalties for Non-Compliance?

• As this legislation has not been completely developed, there are not clear financial penalties for non-compliance yet (8)

Governments in both China and India recognize that cap-and-trade systems are effective means to require corporations to disclose and mitigate their greenhouse gas emissions. This system is becoming increasingly popular throughout the world to account for countries’ biggest emitters and force them to adopt more climate conscious practices or face financial consequences. At DitchCarbon, we provide you with a comprehensive view of your partners and suppliers carbon emissions as well as tailored recommendations on how each of your suppliers can minimize their carbon footprint. We help you understand and reduce your carbon footprint to maintain or attain accordance with legislation in Asia.