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Climate Legislation in Asia

Everything you need to know about Climate Legislation in Asia.

China

China has committed to achieving carbon neutrality by 2060. Intending to generate 1,200 gigawatts of renewable energy by 2025, China is by far the global leader in solar and wind power production (1). By 2030, China intends to supply ⅓ of its power consumption from renewable sources. China’s resolute investment in the construction of renewable energy conductors maintains their pursuit of their climate goals (2). China’s most important climate policy that affects corporations is their Emissions Trading Scheme.

Emissions Trading Scheme (3)

The ETS was implemented to mitigate greenhouse gas emissions in the power sector through utilizing a cap-and-trade system. In this system, corporations in the power sector are allocated a certain amount of emission permits and can trade these permits with a cap on total allocation. This scheme has a bottom-up cap, so the cap is the sum of the total allowance allocation to all covered entities, which was 4,500 tons of CO2 in 2021.

What’s the Legislation Timeline?

  • ETS was revised in 2021 included clause that all corporations subject to the ETS will have to publicly disclose their carbon emissions (4)
    • Specifically to monitor and report their emissions data

What Companies are Affected?

  • Over 2,000 companies from the power sector with annual emissions of more than 26,000 tons of CO2, are affected, including combined heat and power, as well as captive power plants in other sectors

Financial Penalties for Non-Compliance?

  • Currently, fines for failing to submit a report are CNY 10,000-30,000 ($1,484–$4,453), while fines for failures in compliance obligations are CNY 20,000-30,000 ($2,969-$4,453). Any gap between the compliance obligation and allowances surrendered also would be deducted from the following yearʼs allocation.


India

As one of the fastest growing economies in the world, Indian climate policy is incredibly important to ensure that growth can be decoupled from increased emissions. India has committed to be net-zero by 2070 and to have 50% of its electricity generated from renewable energy sources by 2030. Currently, 40% of their electricity is generated from clean energy as India is making significant investments in the construction of renewable energy sources, including green hydrogen (5). Overall, the Indian government is introducing ample legislation to promote its climate goals.

Cap and Trade System (6)

India is currently in the first stage of implementing a cap-and-trade system. It will be partially modeled off of the EU Emissions Trading Scheme, but has a longer timeline before it’s fully phased out. Initially, the Indian government plans to establish a carbon credits market through cultivating demand and increasing the supply by developing and validating emissions reduction projects. After this voluntary carbon credits market is established, the government plans to issue a mandatory cap-and-trade system with restrictions on carbon emissions designated to sectors and corporations though there is an unclear timeline.

What’s the Legislation Timeline?

  • A draft blueprint was published in October of 2021
  • In July 2022, the parliament published a bill establishing the framework for a carbon credit trading scheme, initiating the first stage of this system with the construction of a voluntary carbon credits market

What Companies are Affected?

  • Likely corporations in the power sector will be affected (7)

Financial Penalties for Non-Compliance?

  • As this legislation has not been completely developed, there are not clear financial penalties for non-compliance yet (8)


Governments in both China and India recognize that cap-and-trade systems are effective means to require corporations to disclose and mitigate their greenhouse gas emissions. This system is becoming increasingly popular throughout the world to account for countries’ biggest emitters and force them to adopt more climate conscious practices or face financial consequences. At DitchCarbon, we provide you with a comprehensive view of your partners and suppliers carbon emissions as well as tailored recommendations on how each of your suppliers can minimize their carbon footprint. We help you understand and reduce your carbon footprint to maintain or attain accordance with legislation in Asia.

  1. https://www.theguardian.com/world/2023/jun/29/china-wind-solar-power-global-renewable-energy-leader#:~:text=China%20is%20set%20to%20double,as%20well%20as%20future%20projects
  2. https://www.theguardian.com/world/2023/jun/29/china-wind-solar-power-global-renewable-energy-leader#:~:text=China%20is%20set%20to%20double,as%20well%20as%20future%20projects
  3. https://icapcarbonaction.com/system/files/ets_pdfs/icap-etsmap-factsheet-55.pdf
  4. https://icapcarbonaction.com/en/news/china-publishes-new-draft-national-ets-legislation#:~:text=China%27s%20national%20ETS%20started%20operating,to%20other%20sectors%20over%20time
  5. https://www.iea.org/commentaries/india-s-clean-energy-transition-is-rapidly-underway-benefiting-the-entire-world#
  6. https://icapcarbonaction.com/en/news/india-establishes-framework-voluntary-carbon-market-and-outlines-pathway-towards-cap-and trade#:~:text=According%20to%20the%20blueprint%2C%20the,voluntary%20carbon%20credit%20trading%20scheme
  7. https://www.lse.ac.uk/granthaminstitute/news/disentangling-indias-new-national-carbon-market/
  8. https://www.lse.ac.uk/granthaminstitute/news/disentangling-indias-new-national-carbon-market/

Carbon Footprint

The Strategic Case for Nature-Based Carbon Investments

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Nature-based carbon investments deserve consideration when they address a specific business dependency and produce outcomes you can measure. Imagine Moonbucks, a global coffee roaster planning next season’s espresso blend. It is considering natural Grade 4 coffee from Jimma, in southwestern Oromia, Ethiopia. Its sourcing decisions affect the roasting schedule and the cash tied up in coffee purchases. Moonbucks needs to understand which measures could protect that supply, what they would cost and how it would judge the results.

1. Define the sourcing problem before choosing a project

Moonbucks needs a dependable component for its espresso blend. Its procurement team wants continuity of volume and an agreed cup profile. Replacing a shipment at short notice could require new sample approval and changes to the blend, and given the schedules for cultivation, processing, and freight delivery, is practically impossible. Moonbucks needs to get this right, and its initial concern is inconsistent deliveries. It commissions an assessment of the supplying farms and post-harvest chain. The questions cover land condition, harvest availability and whether drying or storage problems are affecting saleable lots.

This distinction changes the investment brief. A tree-planting proposal cannot be assumed to fix drying problems. Better storage cannot restore eroded land. The team must establish which problem exists before selecting the response.

CCC’s guide to finding nature-based solutions in your supply chain explains where to look. Here, the next task is to turn a broad concern into a testable proposal.

2. Develop nature-based carbon investments around the actual supply chain

The assessment would trace Moonbucks’ purchases back through the exporter and supplying producer groups. Which farms supply the contracted lots? Who controls land-management decisions? How long does the buyer expect to maintain the purchasing relationship?

Furthermore, Jimma natural Grade 4 cannot be treated as interchangeable with every Ethiopian coffee. Moonbucks would need to test any substitute against its own blend and quality requirements.

Suppose Moonbucks’ assessment identifies an opportunity to maintain shade trees and restore vegetation along exposed streambanks. The IPCC describes agroforestry as a way to store carbon in vegetation and soil, with potential benefits for erosion control and water quality.1 Moonbucks would need local advice on species, growing conditions and maintenance before deciding how these measures fit its sourcing plan.

The proposal now has a defined sourcing connection and a candidate intervention. The next steps are to test its effect on production, assess carbon eligibility and build the financial case.

3. Compare the proposal with other ways to protect supply

WBCSD’s Nature-based Solutions Blueprint recommends comparing nature-based options with other responses across their benefits and costs.2 For Moonbucks, that means evaluating the landscape proposal alongside drying improvements, storage controls and alternative sourcing arrangements.

The product’s natural-process designation matters. Moonbucks should examine the drying and dry-milling chain alongside land conditions. Its team would check storage practices, contamination risks and incoming-lot quality to see whether problems arise before or after the coffee leaves the farms.

The revised proposal might combine land stewardship with separate post-harvest controls. Each component needs its own purpose and budget. A sustainability label should not obscure which activity is expected to solve which problem.

The project develops as the evidence improves. Its scope should follow the diagnosis rather than preserve the first idea unchanged.

4. Establish what the carbon outcome could count toward

Moonbucks’ sustainability team now tests the proposed carbon case separately from the sourcing case. Is the objective a measurable change in Moonbucks’ value-chain emissions, verified credits for separate voluntary use, or distinct outcomes under carefully defined arrangements?

Scope 3 covers value-chain emissions. A purchasing relationship alone does not prove that a farm intervention can be included in Moonbucks’ inventory. The team needs an applicable accounting method, defensible boundaries and evidence supporting attribution.

SBTi’s FLAG Guidance (forest, land and agriculture), version 1.2, says purchased credits used as offsets cannot meet near-term FLAG or energy and industry targets. Eligible land-based removals are subject to accounting requirements.3 Moonbucks needs to test its proposal against those rules before including an outcome in its targets.

For Moonbucks’ Jimma proposal, maintaining existing trees and establishing new vegetation could involve different carbon questions. Specialists must examine the baseline and additionality, meaning what changes because the project proceeds. They must also assess measurement and the risk that stored carbon is lost. CCC’s MRV and additionality article introduces those tests.

Until that work is complete, Moonbucks should not budget an assumed Scope 3 reduction or credit-sale receipt. Direct emissions reductions remain the priority.

5. Build a financial case that survives weaker assumptions

Moonbucks’ finance team would now build a multi-year budget. UNEP’s State of Finance for Nature 2023 compares current finance with the investment needed to meet climate, biodiversity and land-restoration goals.4 The company would cost its proposed activities, farmer participation and ongoing monitoring. Verification, where required, is a separate expense. Maintenance and responsibility for replacing failed plantings must remain visible after the initial establishment budget ends.

Operational benefits need equally careful treatment. If fewer rejected lots reduce emergency purchasing, count that saving once. Do not add “supply resilience” as another financial benefit when it represents the same avoided cost.

Moonbucks should compare a base case with slower benefits, higher implementation costs and no carbon revenue. It should also distinguish production outcomes from quality and shipment outcomes. A single good harvest would not prove that the landscape intervention caused better delivery performance.

A project can remain worth funding even when its carbon case needs more work. That decision must rest on the operational evidence and the company’s objectives, without unsupported environmental claims.

6. Fund a pilot with a clear expansion decision

Moonbucks’ first approval would fund a bounded pilot, rather than commit the entire sourcing program. Before spending, Moonbucks would agree on participating farms, responsibilities and the evidence needed at review.

Its scorecard could track farmer participation, implementation costs and plant survival, alongside accepted coffee volumes and lot-quality results. Carbon measurements would follow the selected method. Farm-level traceability must connect the intervention to the actual sourcing relationship.

Suppose Moonbucks’ review later finds that storage changes explain most quality improvements, while the land measures need longer observation. Those findings would shape the next decision: expand the proven component, adjust the landscape work or pause further spending. They would not justify crediting all improvements to tree planting.

This gives nature-based carbon investments a practical place in a multi-year strategy. Funding increases as the evidence supports it, and the project can change direction before a larger commitment.

Discuss a sourcing opportunity with CCC

Carbon Credit Capital’s nature-based supply-chain investment service uses its Dual-Value Model to examine supply-chain economics alongside potential sustainability outcomes.

Schedule a consultation to discuss your sourcing exposure and the questions to resolve before allocating capital.

Sources

  1. Intergovernmental Panel on Climate Change (IPCC), Climate Change 2022: Mitigation of Climate Change, Chapter 7, Agriculture, Forestry and Other Land Uses, section 7.4.3.3 (Agroforestry).
  2. World Business Council for Sustainable Development (WBCSD), Nature-based Solutions Blueprint, 5 June 2024.
  3. Science Based Targets initiative (SBTi), Forest, Land and Agriculture Science-Based Target-Setting Guidance, version 1.2, March 2026, section 3.1.4, pp. 37–38.
  4. United Nations Environment Programme (UNEP), State of Finance for Nature 2023, 2023.
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Carbon Footprint

How to buy plastic credits, and what to check before you do

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A plastic credit funds the collection of plastic waste in places where no formal system exists to collect it. Each credit represents a measured, independently audited quantity of plastic taken out of the environment or returned to use, tracked on a public registry.

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Carbon Footprint

EU carbon credit claims after 27 September 2026

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EU carbon credit claims changed on 27 September 2026, the day the Directive (EU) 2024/825 began to apply across the European Union. The change is narrow. It changes how a company can talk about the credits it buys. A product can no longer be called neutral on the strength of compensation alone; however, every specific, evidenced statement about what a company measured, reduced, and funded stays fully available.

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