The Shanghai city government has issued six methodologies for generating carbon credits under its local emissions program called "Tanpuhui," which is aimed at residents and is scheduled for a wider rollout in 2024, the Shanghai Municipal Bureau of Ecology and Environment said in a notice late March 13.
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Register NowTanpuhui translates to carbon inclusiveness and refers to several carbon schemes rolled out in China at the consumer level that award credits to individuals who reduce their carbon footprint, which can then be sold or used to claim discounts or concessions for goods and services.
These programs are not directly linked to the national carbon emissions trading schemes, like the compliance emission trading scheme or ETS, that are aimed at companies and industries. Tanpuhui-style programs rolled out by Chinese provinces are notable for being one of the few attempts in global decarbonization policy aimed directly at emissions at the demand level to motivate consumers to play a role in carbon reduction.
The methodologies are part of the Shanghai government's 2024 Work Plan to Address Climate Change, issued on March 11, under which it plans to issue Tanpuhui products that can be traded like conventional carbon products through local platforms.
Shanghai Environment and Energy Exchange, or SEEE, currently hosts the national ETS trading platform and the city aims to become the country's carbon trading hub.
The new methodologies enable Shanghai residents to obtain Tanpuhui credits by installing rooftop solar panels, using energy-efficient appliances, driving electric vehicles, taking public transportation and renting bicycles.
The Shanghai government is working to create demand for its Tanpuhui products, but the work plan did not specify how to trade or use the credits.
According to local environment bureau's latest regulation issued in September 2023, Shanghai's Tanpuhui credits are expected to be purchased by corporate buyers with voluntary emission reduction targets. Meanwhile, some high-quality credits can also be used as offsets in Shanghai's regional ETS, which is operating in parallel with the national ETS.
Double counting should be avoided, especially for distributed solar PV projects that may overlap with other environmental markets, the Shanghai city government said in the methodology document. This requirement is in line with global carbon market's norms to enhance integrity.
"The Tanpuhui program must be the project's exclusive channel for credit issuance. Namely, the respective emission reductions cannot be certified again under other schemes like CCER [China Certified Emission Reductions], VCS [Verified Carbon Standard or Verra], GS [Gold Standard] and UN's CDM [Clean Development Mechanism]," the methodology document showed.
For distributed solar projects to get Tanpuhui credits, renewable electricity should neither be traded in any power market nor be certified under any renewable energy certification programs, the government said.
Consumer-level emissions
In April 2022, nine carbon exchanges in Beijing, Shanghai, Guangzhou, Tianjin, Hubei, Fujian, Sichuan, Chongqing and Shenzhen pledged to ensure professional carbon accounting and verification in their Tanpuhui schemes, connect the various domestic programs and provide reasonable price signals, the exchanges had said in a joint statement.
Before this pledge, the Tanpuhui market was quite disorganized and provincial governments adopted different approaches for generating and redeeming the credits.
The private sector has also initiated its own Tanpuhui schemes. Ant Forest, developed by Hangzhou-headquartered technology giant Alibaba, is linked to the digital payment platform Ali-pay, and commonly used to obtain "green points" in return for low-carbon products and services. Alibaba will plant an actual tree on behalf of the consumers if they accumulate enough credits, according to Alibaba's official website.
There have been integrity concerns over China's Tanpuhui market, especially from the country's carbon industry. The lack of nationwide, uniform standards makes it difficult for Tanpuhui products to be recognized as reliable carbon assets.
To address these issues, policy proposals were submitted during the just concluded Two Sessions, the country's biggest annual political gathering, which called for state-level regulation of Tanpuhui and consolidation of all products on a national trading platform.