Emissions trading framework announced

HONG KONG, January 30 — Hong Kong’s Environmental Protection Department (EPD) and the Environmental Protection Bureau of Guangdong Province have released details of the emissions trading scheme between Hong Kong and the Pearl River Delta.

The implementation framework of the pilot scheme sets out the eligibility criteria for participation, trading mechanism, application procedures and monitoring methods. The framework draws on the experiences of China’s national SO2 pilot trading scheme, as well as the Central governement plans for a China-wide emissions trading scheme.

The scheme will trade SO2, NOx and respirable suspended particulates (RSP/PM10); the Hong Kong and Guangdong governments will impose emission caps for each of these three types of pollutants on
respective power plants in the region and allocate emission credits to them.

Emissions trading will take place on a project basis . Eligible power plants will propose emission reduction projects, and will be allocated emission crdits based on the difference between pre- and post-project emission levels.

No formal trading platform or exchange mechanism has been announced. The framework document says participants would “negotiate on the price of transactions having regard to their own situations
and trade emission credits on hand or as determined through contractual arrangements.” No standard contract exists; the scheme only stipulates the minimum information which must be included in the contract.

Copies of all contracts must be lodged with the respective governments – the framework document gives no further information as to the availability of this data, although both governments will publish emission credit allocation data.

Power plants over 100MW burning coal, oil or natural gas are eligible to join the scheme, provided emissions monitoring equipment to prescribed standards: HJ/T75-2001 and HJ/T76-2001; or “Performance Standard and Testing for the Continuous Emission Monitoring of Flue Gas from Power Plants in Hong Kong” (《香港發電廠煙氣排放連續監測工藝標準及檢測方法》).

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