ESG News |February

Selected Monthly ESG News

Carbon Finance

1. In response to the US Inflation Reduction Act (IRA), the European Union (EU) is stepping up its efforts to support the development of low-carbon industries.

On February 2nd, the EU Commission unveiled a draft document entitled "Green Deal Industry Plan for the Net Zero Era" to tackle the challenges posed by the IRA. The EU is contemplating setting targets for green industrial capacity, streamlining regulations for new technology applications, and enabling EU member states to provide subsidies, tax breaks, and other incentives for clean technology.

The EU Commission is also exploring the possibility of loosening restrictions on subsidies and allowing member states to offer more generous subsidies to compete with comparable projects from rival countries.

2. European Carbon Trading Market Hits Record High, Exceeding 100 Euros per Ton

On the 20th of February, the closing price for European carbon emissions skyrocketed to an unprecedented level, surpassing the 100 euro per ton milestone. Specifically, during the month of February 2023, the European Union Allowances (EUA) contract for carbon emissions quota futures closed at a staggering 98.30 euros per ton, representing a 2.13% increase from the Friday closing price on February 17th. In fact, the price even touched a record-breaking high of 99.99 euros per ton during the trading day, which highlights that companies are facing higher costs for carbon emissions, thereby compelling them to embrace cleaner energy solutions and accelerating the growth of green energy.

3. The Supreme People's Court has recently released its first official document regarding "dual carbon" to enhance the functionality of market trading mechanisms.

The document, entitled "Opinions on Providing Judicial Services for Actively and Steadily Promoting Carbon Peak and Carbon Neutrality with the Full Implementation of the New Development Philosophy," was issued on February 17th and serves as the first regulatory document related to "dual carbon" released by the Supreme Court.

This document prioritizes the improvement of carbon market trading mechanisms, which includes the appropriate handling of carbon emissions trading cases as well as the punishment of illegal conduct. In an effort to guide courts at all levels in the correct handling of various types of carbon-related disputes, the Supreme People's Court also provided 11 typical cases that are related to actively and steadily promoting carbon peak and carbon neutrality. Through the management of these cases, which includes the regulation of Bitcoin "mining" services, the Supreme Court provides legal assurances for the well-ordered development of the national carbon market.

ESG Investment

4. The Shenzhen Stock Exchange has taken steps to further enhance the transparency of industry information through strategic measures such as emphasizing industry-specific characteristics, bolstering ESG disclosure, and enhancing operational information disclosure.

On February 14th, the Shenzhen Stock Exchange revised its "Self-regulatory Guidelines for Listed Companies No. 3" and "Self-regulatory Guidelines for Listed Companies No. 4," with a focus on optimizing operational information disclosure, strengthening ESG disclosure, and adjusting non-industry related information disclosure. The report underscores that ESG disclosure will be prioritized for industries with a greater likelihood and greater impact of safety accidents, such as solid mineral resources, chemicals, and civilian blasting. The disclosure requirements for significant safety accidents will be refined, and listed companies will be encouraged to fulfill their social responsibilities.

5. European Union: Prohibit the production and sell of fossil-fuled cars by 2035

On February 14th, the European Parliament passed a resolution endorsing the European Commission's proposal to phase out combustion engine vehicles by 2035 in order to promote the adoption of electric vehicles and achieve the global carbon neutrality target. While the cutoff date is set for 2035, many countries aim to complete the transition from traditional fuel vehicles to new energy vehicles around 2030. In fact, some automakers have already announced their own timelines for ceasing the sale of combustion engine vehicles, hastening the shift towards electrification.

6. Newly-generated electricity demands in the next 3 years will be sustained by environment-friendly power

On February 8th, the International Energy Agency released its highly anticipated 2023 Electricity Market report, highlighting a persistent increase in global electricity demand amidst the backdrop of an energy crisis. However, there is a silver lining: the production of renewable and nuclear energy is also on the rise.

Over the next three years, the growth of global electricity demand is expected to be primarily met by these sustainable sources of energy, underscoring the fact that the power sector's carbon emissions have reached a critical juncture.

As the world grapples with the escalating energy crisis, the report's findings serve as an urgent call to action for policymakers and industry leaders to double down on their efforts to transition towards low-carbon sources of energy.

7. China Environment Exchange made its debut in Beijing's urban sub-center

On February 28th, the China Environment Exchange made its debut in Beijing's urban sub-center with the goal of driving the country towards a greener and more low-carbon economy and society. This exchange offers both environmental rights trading and green and low-carbon services, bolstered by a fully developed, nationally standardized CCER registration and trading system. With China's carbon market presenting significant prospects, the "upgrade" of the China Beijing Environment Exchange has the potential to pave the way for a more sophisticated, multi-tiered carbon trading mechanism, with voluntary trading markets playing a critical role in reducing carbon emissions.

8. Carbon Peaking and neutrality will be incorporated into the recommended national standards

On February 16th, the Chinese government released its National Guidelines for Project Standards in 2023, which introduced carbon neutrality as a recommended standard and identified several crucial sectors to support. These include the clean utilization of fossil energy, energy conservation and carbon emissions in public institutions, and the monitoring and forecasting of wind and solar energy. By formulating these standards and providing policy support, the government aims to encourage applications for project approval from social units, thereby facilitating the profound development of global standardization and expediting the standardization process for green development.