China Identifies Data Fraud in Carbon Market

Regulator of new carbon emissions trading market emphasises need for “accurate and trustworthy” data.

China’s Ministry of Ecology and Environment (MEE) has named and shamed four companies for falsifying their carbon emission reports in the power sector.

The MEE is tasked with ensuring the quality and transparency of emissions data to support China’s carbon emissions market launched last July. From October to December last year, it initiated a campaign to verify the accuracy of carbon emission reports of power companies, which were among the first batch of firms allowed to participate in the market.

In findings released on 14 March, the MEE said Beijing-based data verification company Zhongtan Nengtou Tech was found to have tampered with and forged test reports, and instructed clients on how to fabricate coal samples sent for testing. China Huadian and China Resources Holdings are among the power generation companies that worked with Zhongtan Nengtou.

Another testing agency, Liaoning Dongmei Testing and Analysis Research Institute, was also found to have tampered with test reports. Two other companies, SinoCarbon Innovation & Investment Co and Qingdao Xinuo Renewable Co, were found to have produced “distorted and inaccurate conclusions” in their reports.

The MEE has asked local environmental bureaus to investigate the four companies, adding that it will further tighten monitoring and administration of carbon data verification companies.

“Accurate and trustworthy data is the lifeline for the effective and standardised operation of the carbon emissions trading market,” the MEE said, adding that it will “resolutely investigate and deal with illegal data such as false reporting, concealment, and falsification”.

The MEE will key ramp up supervision and management of technical service institutions and standardise their consulting, verification, and testing practices to ensure the stable and healthy operation of the carbon market.

Under rules released in early 2021, a maximum penalty of CNY 30,000 was set for false reporting, failure to submit emissions reports, or concealing information in such reports. Other penalties included a reduction in emission allowances for firms that fail to rectify such problems.

During the recent “Two Sessions” annual meetings, some participants had proposed that authorities introduce tougher penalties for faking carbon emission reports, to prevent fraud from disrupting the carbon emissions market.

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