The legal landscape of carbon credit secured financing in China

This paper provides a legal analysis of carbon credit secured financing, focusing on a comparative study of the verified carbon standard and China certified emission reduction (CCER) systems. Utilising doctrinal analysis and document analysis, it introduces a multidimensional framework to evaluate carbon credits’ eligibility as property to secure debts. The paper argues that verified carbon units (VCUs) should be regarded as contractual claims, whereas China certified emission reduction units (CCERUs) ought to be positioned as property rights in general carrying erga omnes (against the world) effect under the protection of Article 126 of the Civil Code of the People's Republic of China. It recommends using VCUs as debt security through a floating charge, while CCERUs are more suitable for a fixed charge. These findings provide practical guidance for stakeholders aiming to leverage carbon credits for financial security, contributing to optimising both China's domestic and the global green financing system.

Carbon credit · Certification · China · Debt · Greenhouse gas · Climate Change and Geoengineering · Climate Change Policy and Economics · Sustainable Finance and Green Bonds