License or right: legal issues of use-energy-right transactions in China

Overview & Synopsis

Under the framework of national total energy consumption control, by national primary distribution and market secondary distribution, use-energy-right is defined as a compound property interests, of which the core content is energy use quota. The complexity of use-energy-right is reflected in the fact that it combines intrinsic attribute of state control on public law with extrinsic attribute of property interests. Specifically, as an innovative system aimed at achieving "double control" target for national total energy consumption and intensity, the use-energy-right system imposes restrictions on the energy usage rights of energy-using units, reflecting the strong characteristics of public power. At the same time, in order to play the decisive role of market in energy elements allocation, system of use-energy-right needs to clarify its property characteristics such as exclusiveness and tradability within the framework of administrative licensing, thereby stimulating the incentive effect of the market. In view of this, there is an urgent need to accelerate the relevant legislative process, clearly define the position for system of use-energy-right, initial allocation rules, trading rules and pricing mechanisms. Furthermore, emphasis should be placed on establishing a synergistic mechanism among system of use-energy-right, energy saving transaction system, and carbon emissions transaction system, so as to maximize the synergy and complementary advantages among various systems. Keywords: Use-energy-right. Total energy consumption control. Property right. Permissive interest.