Beijing Court Battle Puts Spotlight on China’s Carbon Emissions Trading Legal Framework

In the afternoon of Feb. 23, the Chaoyang District People's Court of Beijing heard the case of contract dispute between Sichuan Luzhou Chuannan Power Generation and Beijing Longyu Environmental Protection. Photo: Beijing’s Chaoyang district court

A court in Beijing has heard the capital’s first case of a contract dispute between two firms engaged in carbon emissions trading, bringing to light the hurdles, such as vague rules, that are holding back growth of the world’s largest carbon market.

According to a Sunday statement from Beijing’s Chaoyang district court, Sichuan Luzhou Chuannan Power Generation Co. Ltd. sued Beijing Longyu Environmental Protection Co. Ltd. for breach of contract after the latter refused to provide it with 460,000 tons of carbon emission allowances at a price of 44.7 yuan ($6.5) per ton in December 2021, resulting in steeper financial cost to the power producer who had to purchase those allowances from a third-party agency.