BEIJING More than a quarter of all companies covered by Beijing's municipal carbon laws ignored a key reporting deadline, local media reported Friday, with some powerful companies questioning the local government trading body's authority to regulate them.
Beijing's carbon trading market, one of six set up in China to rein in rapidly growing greenhouse gas emissions, caps carbon dioxide from nearly 500 local enterprises.
Most of them must hand over permits to the government to cover for their emissions, while some must only report their CO2 levels.
But 140 of them missed an April deadline to submit a verified report of their 2013 emissions, local newspapers reported on Friday, a key to determining how many permits each firm must hand over to the government to cover for CO2 output.
Some of the firms implied that Beijing's Development and Reform Commission (DRC), which operates the scheme, did not have the authority to issue orders.
"It ends up like this because they don't follow our rules and the document shown to us does not fit the requirements," Zhou Jiancheng, vice director of planning and statistics at the Beijing Railway Bureau, one of the firms that failed to submit the report, told newspaper Beijing Youth Daily.
He said the company would have to see a "red-header document" before they would submit the emissions report.
In China, a "red-header document" normally refers to orders issued by the highest levels of government, whose name would be printed in red on the letterhead.
By saying it has not received such a document, the Beijing Railway Bureau indicated it did not consider the scheme rules issued by the DRC as authoritative enough to pay attention to.
The Beijing DRC was not immediately available for comment.
The Beijing Railway Bureau operates most of the railway system in Beijing, Tianjin and Hebei province, and is owned by the China Railway Corp, making its CEO far more powerful than the head of the Beijing DRC.
It is unclear whether it is obliged to surrender permits under the scheme or if it only must report its emissions, as the DRC has not published a list of scheme participants.
State-owned enterprises (SOEs) routinely ignore environmental regulations issued by local governments, one of the main reasons why China is struggling to cut soaring pollution levels despite issuing a raft of environmental policies in the last couple of years.
A new law mandates all companies to follow environmental regulations regardless of the authority level, but that does not enter into force until next year and it remains to be seen how successful it will be.
"They (SOEs) are not just businesses, many have administrative status higher than local governments. It is quite difficult to manage and has not been completely resolved yet," Ma Jun, director of the Institute of Public and Environmental Affairs, told Reuters.
Beijing, where companies must hand over permits to the government to cover for their 2013 emissions by June 15, is only the latest of several local governments struggling to enforce its carbon scheme.
Guangdong province and the cities of Shenzhen and Tianjin have also found it difficult to convince local firms to follow the rules.[ID:nL4N0OT13S]
The regional trading markets are intended as a pilot phase before a national market begins later in the decade.
Sun Cuihua, deputy director of the climate change department in the National Development and Reform Commission (NDRC) said earlier this month the national market will begin in 2016 or 2017, but that it won't be fully operational until 2020.
(Editing by Michael Perry)