Abstract: "carbon peaking and carbon neutralization" is the core task for the smooth realization of sustainable development of China's economy at present and in the future. Mastering a scientific, accurate and systematic carbon emission data statistics system is the basis and premise for carrying out a series of work to ensure the smooth realization of the "double carbon" goal. At this stage, there is a gap between China and the international advanced level in carbon emission data reporting, integration, verification and application. Therefore, it is necessary to make a comparative analysis of China's foreign carbon emission data from both macro and micro perspectives, learn from experience and make up for the shortcomings, so that the carbon emission data can better contribute to the realization of China's "double carbon" goal.
I. comparative analysis of national carbon emission data verification system at home and abroad
Climate change has become a serious challenge for human development, and low-carbon transformation has become a global consensus. The proposal of the "3060" goal is a major contribution made by China as a responsible power to the global response to climate change. However, carbon neutralization is by no means a purely technical goal. The standards, technology, economy, trade and capital around it have set off a new round of competition. Among them, the competition for the international voice of carbon emission verification will be directly related to the deployment of China's "3060" work and the difficulty of achieving the goal.
(I) developed countries have long controlled the international voice of carbon emission verification method system and database construction system
In terms of the construction of international carbon verification standard system, a series of guidelines for national greenhouse gas inventories (hereinafter referred to as the guidelines) and relevant supporting documents prepared by the United Nations Intergovernmental Panel on climate change (IPCC) have made authoritative explanations on the concept and verification methods of greenhouse gas emissions, and laid down the methods and rules followed by countries around the world in establishing greenhouse gas inventories and emission reduction performance. Since the green and low-carbon transformation in developed countries was carried out earlier, the compilation of the guide has been controlled by research institutions and experts in developed countries for a long time. In recent years, the participation of developing countries has gradually increased. The proportion of experts from developing countries in the 2019 version of the guide has increased from 24% in the 2006 version of the guide to 42%. However, since the 2019 version of the guide is only a supplement and improvement to the original version, the influence of developing economies including China on the formulation of carbon emission verification system is still very limited.
In terms of the construction of international carbon database, the International Energy Agency (IEA), the Oak Ridge National Laboratory (CDIAC), the global atmospheric emission research database (EDGAR), the U.S. Energy Information Agency (EIA), the world bank, the World Resources Institute and BP seven institutions. The carbon emission verification institutions from developed countries have covered the carbon emission verification data of most countries and have been widely adopted by various research institutions.
Based on the current international standard system of carbon verification, international institutions generally overestimate China's carbon emissions to a certain extent. For example, compared with China's previous National Information Circular on climate change submitted to the international community, China's carbon emissions in 2005 verified by BP were overestimated by 7.6%; Compared with the carbon project of the Chinese Academy of Sciences, BP verified that China's carbon emissions in 2005 were overestimated by 23%.
In addition, since China joined the WTO in 2002, the carbon emissions based on production activities have been significantly higher than those calculated based on demand activities. This difference should have been transferred abroad with trade, especially developed countries - this carbon emission verification based on demand activities can better reflect fairness and help China take the initiative in climate negotiations. However, according to the emission reduction principle of "territorial emission responsibility" currently adopted by the international community and the global input-output data of European and American research institutions wiod (World input-output database) and GTAP (Global trade analysis project), China's total carbon emissions bear the carbon emissions that should be borne by other countries. According to the existing international standards for carbon verification, China is facing arduous challenges in completing the emission reduction process that developed countries have achieved in 60-100 years in a relatively short time.
(II) the construction of China's carbon emission verification system and database system needs to be improved
First, the lack of historical data is not conducive to China's striving for space in international climate negotiations. At present, China's ecological environment department has submitted five-year carbon emission verification reports to the United Nations in 1994, 2005, 2010, 2012 and 2014 according to the 2006 edition of the inventory guide and relevant supporting documents. However, the lack of historical data is difficult to support the judgment of China's Carbon Emission Trend and the calculation of national cumulative carbon emissions and per capita cumulative carbon emissions, resulting in the overestimation of China's carbon emissions by foreign institutions becoming the "authoritative data" widely cited in the world, which is not conducive to China's use of the principle of fairness in international climate negotiations to strive for more space.
Second, the existing carbon emission verification system at all levels in China is not perfect enough to effectively verify and support the verification results at the national level, which is not conducive to the decomposition and implementation of carbon neutralization goals in China. Carbon emission verification must be based on the level of energy consumption and the carbon emission factors of major fossil fuels. There are great differences in the historical data of energy consumption statistics between national and provincial levels, which has been expanding in recent years, from 3% in 2015 to more than 4% in 2017; There are significant differences in carbon emission factors investigated and counted by various authoritative institutions, up to more than 10%. There are 12-19% differences in carbon emission verification results reported to the state, exceeding the international error range of plus or minus 5%.
II. Comparative analysis of carbon emission data integration at the enterprise level at home and abroad
From the micro level of enterprises, comparative analysis can be carried out from two aspects: the source and mastery of raw carbon emission data and the development of carbon emission verification business.
(I) China's carbon emission data sources need to be broadened
The carbon emission data reporting mechanism of European and American countries can be divided into mandatory and voluntary. For emission enterprises in key areas, the reporting of carbon emission data is mandatory, and the relevant government environmental authorities have the most comprehensive original data. Mandatory reporting for key emission areas is mostly promoted by government departments, constrained and guaranteed by laws and regulations, and has the characteristics of top-down.
The United States Environmental Protection Agency (EPA) is the management department of mandatory greenhouse gas reporting in the United States. The mandatory greenhouse gas reporting system issued in 2009 requires enterprises with annual carbon dioxide emissions of more than 25000 tons in the production process to submit data in electronic form. The EPA records, counts, certifies and audits this part of data, and establishes a network-based carbon emission database, It covers about 85% of the carbon emission sources in the United States, spanning 31 industrial sectors and types.
The EU emissions trading system (ETS), established in 2005, is the earliest carbon trading market in the world. Based on the market operation rules, the system requires operators of more than 10000 fixed emission devices and aviation emission devices to report greenhouse gas emission data on an annual basis.
The European Commission will collect, process and sort out these data to form an original carbon emission database, covering 40% of the carbon emissions of the whole EU.
The carbon emission data mastered by government organizations and environmental authorities in European and American countries can be queried by the public free of charge, mainly for policy-making, academic research and other purposes.
Voluntary disclosure of carbon emission data in European and American countries is a spontaneous behavior of enterprises. Some non-profit organizations and commercial institutions have integrated some carbon emission data through this channel. Driven by business interests or public welfare ethics, some European and American enterprises choose to actively disclose carbon emission data on specific platforms, which has the characteristics of bottom-up. Mingsheng, a US index compilation company, has integrated the carbon emission data of more than 9600 enterprises in 198 countries through independent disclosure or model tool estimation. The global environmental information research center (CDP), a global non-profit organization, obtained greenhouse gas emission related data from 5500 enterprises around the world through independent disclosure. In 2020, the market value of companies that disclosed climate related data to CDP accounted for more than 50% of the total market value of Companies in G20 countries.
China's carbon emission data reporting mechanism can also be divided into mandatory reporting and voluntary disclosure. The environmental authorities of the pilot provinces (cities) of carbon trading market obtain first-hand data through mandatory reporting by enterprises. From 2013 to 2016, nine provinces (cities) in Beijing, Tianjin, Shanghai, Chongqing, Hubei, Guangdong, Shenzhen, Sichuan and Fujian successively carried out carbon emission trading pilot projects, and successively issued relevant regulations on enterprise greenhouse gas emission information disclosure, requiring key carbon emission units in high energy consuming industries, including electric power, iron and steel, chemical industry, water sludge, petrochemical and papermaking, to submit annual carbon emission data to the local ecological environment department (bureau), After verification by a third-party organization, it shall be used to formulate the carbon emission quota of each emission enterprise for the next year.
At present, the national carbon emission trading market has been officially launched. The first batch of more than 2200 emission control enterprises in the power industry need to prepare the greenhouse gas emission report of the unit in the previous year according to the technical specifications for greenhouse gas emission accounting and reporting formulated by the Ministry of ecological environment, specify the emission, and report it to the provincial competent department of ecological environment where the production and operation sites are located before March 31 of each year, The original records and management accounts of the data involved in the emission report will be kept for at least five years. It is expected that during the 14th Five Year Plan period, eight key energy consumption industries such as steel, cement, chemical industry and building materials will be included in the unified emission trading market. At that time, key enterprises in relevant industries must also report annual carbon emission data to the competent authorities, and the coverage of China's carbon emission data will be further expanded at that time.
Some non-profit organizations in China have obtained some carbon emission data through voluntary disclosure by enterprises. In 2016, the State Council's 13th five year plan for controlling greenhouse gas emissions encouraged state-owned enterprises, listed companies and enterprises incorporated into the carbon emission trading market to take the initiative to disclose greenhouse gas emission information. At present, some state-owned enterprises and listed companies have actively responded to the call and spontaneously disclosed greenhouse gas emission data in industry annual reports, social responsibility reports and other carriers. In addition, some Chinese enterprises participating in international cooperation voluntarily disclose carbon emission information on non-profit platforms based on the evaluation requirements for green supply chain management issued by the Ministry of industry and information technology. On June 28, 2021, the CSRC issued the revised standards for the format of annual reports and semi annual reports of listed companies to encourage listed companies to voluntarily disclose carbon emission information during the reporting period. Through the above disclosure, some non-profit organizations in China have some carbon emission data.
(II) there is room for improvement in quality control and talent reserve of Chinese enterprise carbon verification business
Under the institutional framework of forcing enterprises to report carbon emission data and the carbon emission trading market mechanism, it is an international common practice for third-party institutions to verify the carbon emission data of enterprises or projects to ensure the authenticity of the data. For example, the mandatory greenhouse gas reporting system of the United States and the greenhouse gas and energy reporting act of Australia require that the carbon emission data reported by enterprises must be verified and verified by an independent third party in order to ensure the authenticity and compliance of the reported data; Investors around the world continue to pay more attention to corporate greenhouse gas emissions, prompting large companies to continuously strengthen carbon data disclosure, and rely on authoritative external certification services to show the quality and reliability of data. According to the research of the conference board, the proportion of companies purchasing certification services related to social responsibility indicators in the "S & P global 1200 index" component companies increased from 25% in 2013 to 38% in 2016, of which about 90% of the certification services purchased by companies only focus on greenhouse gas emission verification.
Internationally, third-party institutions must obtain professional qualifications recognized by the country to carry out carbon emission data verification business in a specific country. The international carbon verification qualification is based on the carbon emission verification standard iso140643 issued in 2006, which regulates the process and operation of the third-party carbon verification business, including document review, on-site verification, personnel interview, sampling, quality control and other requirements. American National Standards Institute (ANSI) is the only organization in the United States that has granted the business qualification of greenhouse gas emission certification. There are 18 carbon verification institutions recognized by ANSI, and the licensed institutions can practice in the whole United States and many regions of Canada; The Royal Accreditation Commission (UKAS) provides relevant qualification support for third-party verification institutions in the UK.
China's third-party carbon emission verification business is mainly based on two mechanisms.
First, the government bidding or key enterprise entrustment of the pilot province (city) of carbon emission trading. The relevant departments of the pilot provinces (cities) of carbon emission trading shall solicit, select and file the third-party carbon verification institutions in accordance with the reference conditions for third-party verification institutions and personnel of carbon emission trading issued by the national development and Reform Commission in 2016, and obtain the third-party carbon verification services from the institutional filing Library in the form of government procurement or bidding, and the fees shall be paid by the local finance. For example, in June 2021, Shanghai Ecological Environment Bureau invited public bidding to verify the carbon emission status of carbon trading pilot enterprises in steel, aviation, transportation, petrochemical, chemical and other fields in the city in 2020. Some carbon emission verification projects can also be entrusted by key enterprises. For example, Beijing Daxing airport was included in the list of key emission units by Beijing Municipal Bureau of ecological environment in March 2020, and entrusted China Quality Certification Center to verify its carbon emission in 2019, so as to provide data basis for its participation in Beijing carbon emission trading market.
Second, listed companies purchase third-party services for the needs of independent disclosure. In response to global climate change, more and more stock exchanges require or encourage listed companies to disclose verified greenhouse gas emissions. For example, Industrial Bank Co.Ltd(601166) which is listed on the Shanghai Stock Exchange entrusts Ernst & Young Huaming certified public accountants to verify the carbon dioxide emissions disclosed in its corporate social responsibility report.
China has a large number of third-party carbon verification institutions, and there is still room for improvement in their professionalism. The competent environmental authorities of each pilot province (city) shall select carbon verification institutions in accordance with the reference conditions for third-party verification institutions and personnel of carbon emission trading issued by the national development and Reform Commission in 2016, and specify the registered capital, number of inspectors, project experience, etc. For example, the measures of Beijing Municipality on the administration of carbon emission trading verification institutions (for Trial Implementation) stipulates that the verification institutions must be approved by the Executive Board of the clean development mechanism (CDM) or filed by the national development and Reform Commission, have more than three (including) inspectors with the filing qualification of the city, and set requirements for the professional titles and professional experience of relevant personnel.
In terms of quantity, there are a large number of local third-party verification institutions selected and filed in the pilot provinces (cities), up to 145, and up to 28 in Beijing alone (Table 1).
The regulatory system of China's third-party carbon verification institutions is not perfect. At present, there are no relevant qualification consultation and certification standards, which can not distinguish the verification ability and market credit of practitioners through qualification. At the same time, there is a lack of industry associations that can make up for the regulatory system, resulting in the inclusion of scientific research units, carbon asset management companies and engineering consulting companies in some places, and the professionalism can not be fully guaranteed. In terms of carbon verification technology, China's third-party carbon verification business and international practice also follow iso140643 standard, but there is a certain gap between the detailed and complete degree of sampling and quality control and the leading foreign carbon verification institutions.
III. application of carbon data
At present, China's foreign carbon emission data are mainly used in two fields: one is integrated into credit rating and credit analysis, and the other is used as an important indicator of ESG investment strategy.
(I) credit rating integration of China's carbon data is in its infancy
Carbon emission data is used by international rating agencies as an important reference for analyzing enterprise credit risk and integrated into relevant businesses of credit rating and credit analysis. Based on the enterprise credit rating, the "ESG credit impact score" of Moody's rating (MIS) scores the environment, society and corporate governance respectively at levels 1-5, and finally obtains a comprehensive ESG credit impact score. The higher the score, the greater the negative impact of ESG on the enterprise. Among them, "carbon transition" is one of the important inspection indicators of the environmental part, and the score of the project involves the carbon emission data of enterprises.
Moody's analysis (MA) "climate risk scenarios" combines environmental risk variables with macroeconomic and financial variables to build a professional climate risk assessment model to provide market participants with a comprehensive assessment of physical risks and low-carbon transformation risks, including stress tests under different scenarios and supporting risk management schemes, Carbon emission data is one of the important environmental risk variables in the model. As an integral part of Moody's ESG solutions, 2-4-7, a subsidiary acquired by Moody's, also provides services in climate solutions, that is, by analyzing the environmental risk exposure, greenhouse gas emission carbon footprint and fossil energy data of more than 5000 listed enterprises around the world, it reveals the climate risks faced by enterprises and their potential impact on financial risks, Assist investors to conduct due diligence and form investment decisions through the climate risk exposure data of assets.
In China, the application mode of integrating carbon emission data into credit rating or credit analysis is still in the process of exploration. In October 2020, the Ministry of ecology and environment, the national development and Reform Commission, the people's Bank of China, the China Banking and Insurance Regulatory Commission and the China Securities Regulatory Commission jointly issued the guiding opinions on promoting investment and financing in response to climate change, which clearly mentioned "encouraging credit rating agencies to incorporate environmental, social and governance factors into the rating methods". At present, Chinese rating agencies have signed a statement at the international responsible investment agency pri (Principles for responsible investment, hereinafter referred to as PRI) and publicly promised to include ESG related factors in their credit rating and credit analysis. However, from the publicly disclosed information, in practice, Chinese rating agencies have not clearly reflected ESG factors in their rating methods.
(II) carbon data application scenarios invested by China ESG are expected to be further enriched
Internationally, carbon emission data is an important reference index in many ESG investment strategies. ESG investment philosophy refers to the inclusion of indicators related to the three elements of E (environment), s (Society) and G (Corporate Governance) into the investment decision-making process. E (environment) involves the evaluation and consideration of the carbon transformation of high carbon emission enterprises and the potential impact of carbon emissions of enterprise activities on climate by investment institutions. Carbon emissions is one of the important indicators.
Mainstream ESG investment strategies in the world, such as negative screening method, best in class method, thematic investment and active ownership, will involve the application of enterprise carbon emission data. Queensland Investment Corporation (QIC), Australia's largest investment management organization, identified significant problems in product carbon footprint performance and corporate governance of an Asian carmaker after making an "active ownership" ESG investment, and began to monitor the improvement of the company. After the manufacturer issued new bonds three months later, QIC believed that the bond pricing could not compensate the ESG risk faced by investors, so it refused to participate in the primary market transaction and provided feedback to the consortium company.
Carbon data is also applied to the evaluation and certification of international green financial products. The sustainable development linked bond (SLB), which first appeared in Europe in 2019, refers to a debt financing instrument that links the bond terms to the issuer's sustainable development goals. The linked objectives include key performance indicators (KPIs) and sustainable development performance objectives (SPT), which respectively represent the sustainable development performance indicators that play a core role in the issuer's operation and the quantitative evaluation objectives of key performance indicators. If the key performance indicators fail to meet (or reach) the predetermined sustainable development performance objectives within the time limit, the adjustment of bond terms will be triggered. In 2019, the SLB bond issued by Enel set "reducing direct greenhouse gas emissions" as KPI and "by the end of 2030, the greenhouse gas emissions corresponding to each kwh of energy output will be equal to or less than 125g carbon dioxide" as SPT, promised to disclose the carbon emission reduction on an annual basis, and hired a third-party institution to verify the relevant indicators and issue a report, If the carbon emission reduction fails to meet the predetermined target, the bond interest rate will rise by 0.25% from 2031.
In China, carbon emission data is one of the important indicators to evaluate and certify green financial products. In February 2021, China launched the first batch of "carbon neutralization" bonds focusing on carbon emission reduction. One of the characteristics of the bonds is that professional third-party institutions conduct quantitative evaluation and calculation of environmental benefits such as carbon emission reduction, and continuously disclose the project progress and Realization of carbon emission reduction benefits during the duration after the issuance of the bonds, including the certification and measurement of enterprise greenhouse gas emission reduction. In May 2021, China also launched sustainable development linked bonds (SLB). Although the SLB bonds issued in China have not been linked to the carbon emission reduction target so far, with the gradual implementation of the "3060" target, future issuers are likely to set carbon emission related indicators as sustainable development performance indicators. The application of carbon data in China's ESG investment strategy is still in its infancy. At present, the ESG investment strategy of Chinese investment institutions is mainly based on the negative screening method. For example, enterprises with high annual carbon emissions are screened out in the investment portfolio to avoid relevant ESG risks. In addition, the application scenarios of carbon emissions in other ESG investment strategies need to be enriched.
IV. summary and suggestions
Through the comparative analysis between China and foreign countries, it can be found that there is still a gap in varying degrees between China and the international advanced experience in the integration and application of carbon data.
From a macro perspective, China's voice in the formulation of carbon emission verification standard system needs to be improved. Developed countries control the international voice of carbon emission verification method system and database construction system, which is reflected in the leading position in the formulation of carbon emission verification standard system and the monopoly of carbon emission international database. The absence of voice is not conducive to China's striving for space in international climate negotiations.
China's carbon emission verification system at all levels needs to be improved, which is difficult to effectively support the decomposition and achievement of the national carbon neutralization goal.
From the micro level, the gap between China and the international advanced level is mainly reflected in three aspects:
First, reporting and mastering of enterprise carbon emission data. Relevant legislation in European and American countries started earlier, providing legal guarantee and implementation basis for the implementation of mandatory carbon emission data reporting system. At present, China's legislation related to mandatory reporting of carbon emission data is still blank. In addition, China's carbon emission data integration institution is still in its infancy, and there is a certain gap in data scale and quality compared with foreign institutions.
Second, carbon verification business practice. At present, China's carbon emission verification institutions are recognized by carbon trading pilot provinces and cities, and there is no national qualification certification standard. In terms of practical operation, although referring to the same international standards, the detailed and complete degree of sampling and quality control needs to be improved compared with foreign leading carbon verification institutions.
Third, carbon data application. Compared with the international advanced level, China's carbon emission data has relatively few application scenarios in investment, and the diversified service system has not been established.
With the gradual improvement of China's carbon emission data reporting mechanism, the accumulation of China's carbon data is gradually improving. In this context, we should actively give play to the public goods attribute of mandatory disclosure of carbon data. We can refer to foreign practices to strengthen the openness, transparency and sharing of mandatory disclosure of carbon data, so as to make it more widely used in business and research fields such as carbon accounting, carbon verification, green certification and ESG rating, and form better support for the completion of the "3060" goal by improving the application scenarios of mandatory disclosure of carbon emission data.
(author: Chen Daidi, general manager of macro research headquarters of China bond credit rating Co., Ltd., Li Xin, senior analyst and Xiao siyao, analyst)
