context: The Environmental Code is set to be the second formal code in PRC history after the Civil Code was adopted in 2022, comprising five volumes and 1,188 articles. A first draft of the Code was released in May 2025. Second drafts of three volumes were subsequently released on the National People's Congress website on 17 September.
Second drafts of three volumes within the PRC's Environmental Code were recently published for public comment after undergoing a second review at the 14th National People's Congress Standing Committee. General Provisions, Ecological Protection and Green and Low-Carbon Development volumes are open for comment until 30 October 2025.
During deliberation, issues such as allocation of carbon trading allowances and linkage between mandatory and voluntary markets drew considerable debate, reports Caixin. However, these matters are not explicitly clarified in the draft.
Article 50 of the general provisions stipulates that dispatched agencies established by municipal ecological departments may independently conduct on-site inspections, seal or seize facilities, enforce performance measures and impose administrative penalties.
Suggestions were raised to grant dispatched agencies licensing powers as well as inspections and penalties. Delegating licensing to capable county or district-level bureaus would allow nearby permit and environmental impact assessment processing and greater efficiency, according to one Party official.
The drafting process considered legal provisions to address climate change, dual carbon goals and green transition needs, setting green and low-carbon development apart as a distinct volume.
Articles within the volume stipulate that the state shall establish an emissions trading market and a voluntary greenhouse gas reduction trading market. Some commentators noted that allocation of allowances constitute a significant power, requiring robust safeguards to ensure fairness and transparency. Others queried how the two markets would be structured and interact, as there is no mention of integration.
So far, the pollution prevention, legal responsibilities and supplementary provisions volumes of the Code have not entered a second reading. The pollution prevention section is the largest, with nine parts integrated from existing key pollution control laws (air, water, soil, solid waste, noise, etc.), making up nearly half the Code's length. The legal responsibilities section is largely replicated from existing laws, and has been criticised for a failure to address the problem of excessive punishment in enforcement.
Some legislative participants further argued that carbon cap setting and allocation affect the entire economy: the law should include more detailed provisions on determining caps, allowance setting and allocation procedures.