Design a national ETS with focus on inclusion of the electricity sector and state-owned enterprises.
China’s annual GHG emissions in 2008 was estimated as 7,031 million tonnes, while per capita CO2 emissions from fossil fuel combustion in China were 5.13 tons in 2009, equivalent to 52% of the average level in OECD countries.
China’s climate change strategy is integrated into its social and economic development planning. Action on climate change mitigation will be an important catalyst for the restructuring of key aspects of the Chinese economy, including the power sector. China pledges to reduce its carbon dioxide emissions per unit of GDP by 40–45% by 2020, compared with 2005 levels, , and decrease by 17% by 2015. China aims to increase non-fossil-based primary energy consumption to 15% by 2020.
In order to achieve this target, the Chinese government is piloting an Emissions Trading Scheme (ETS) in seven regions in China before extending that to the national level. China is exploring and piloting domestic ETS to achieve its mitigation target cost effectively. These pilots cover 5 cities and 2 provinces, accounting for 18% of China’s population and 28% of its national GDP. Several pilots will become operational in 2013.
China has built its administrative and working mechanisms to address climate change issues under the National Development and Reform Commission (NDRC), with division of responsibilities among relevant ministries based on sectors and provincial bodies. Policies have been designed based on China’s National Climate Change Program and the 12th Five Year Plan. The 2009 Resolution of the Standing Committee of the National People’s Congress to develop responses to climate change requires the alignment of climate change related laws with the government’s working plan.
In order to support infrastructure and capacity building for the development and operation of China’s ETS, the following requirements need to be addressed:
- Establishing a reliable data statistical system,
- Effective program management,
- Legal/regulatory framework for China ETS
The PMR will support
- Designing and preparing for a national ETS, including work on cap setting, allocation, MRV, mechanisms for price containment, market oversight and a legal framework;
- Specific analytical work will be carried out on the inclusion of SOEs and the power sector; and
- A national ETS, which is targeted to launch between 2016 and 2020.
By implementing the ETS, China expects to achieve market-based resources allocation and financial development. It would require effective enterprise involvement, improvement of government management and international communications.
To achieve the CO2 emission reduction goal through a national ETS, China is currently piloting seven ETSs in Beijing, Tianjin, Shanghai, Chongqing, Hubei, Guangdong and Shenzhen.
As part of formulating pilot plans for ETS, cap setting, emission allocation mechanism, MRV system, registry, trading rules and offset mechanisms have been developed. They are now at a stage of specifying implementation plan details and building infrastructure. They intend to launch the pilot ETS program into full operation in 2013.
Since 2005, China developed a large number of CDM projects, ranking the highest in terms of the number of registered projects and estimated average annual reductions.
- 2,708 CDM projects (52.1% of the world’s total) registered after CDM Executive Board’s approval (as of end of November, 2012)
- 460million tons of CO2 equivalent (65% of the world’s total) estimated as average annual reductions of Chinese CDM projects
Offset and/or Other Emission Reduction Crediting Programs
Offset credits would be allowed within and linked to China’s ETS.
Other Activities to Support the Development of Market-based Mechanisms
A voluntary emission trading market has been initiated since 2008. In 2009, “Panda standard” (a voluntary carbon standard) was issued. In June 2012, the NDRC released the Interim Regulation and the guidelines to effectively implement national-level framework of voluntary market trading.
- The Ministry of Finance is the national focal point to the World Bank and for the financial management of resources from the PMR.
- The National Development and Reform Commission (NDRC) is the implementing agency of the project responsible for the project oversight, preparation of the work plans and report, coordination with relevant organizations and filing of project documents. News from the NDRC is available here.
- China: A Vital Partner in Combating Climate Change (September 17, 2013)
Jim Yong Kim, President of The World Bank Group signed a memorandum of understanding with the chairman of the National Development and Reform Commission to expand cooperation in the areas of climate change, clean energy, reduction of traffic jams and air pollution, and improved flood risk management.
- Australia and China Strengthen Carbon Market Collaboration (April 9, 2013)
The two countries agreed to strengthen their collaboration on carbon markets.
- China: GEF grant to help reduce traffic congestion and carbon emissions in Chinese cities (March 29, 2013)
The World Bank approved a grant of US$18.18 million from the Global Environment Facility (GEF) to China to support the reduction of traffic congestion and greenhouse gas emission in large cities.
- China gets ready for a New Carbon Era (March 15, 2013)
China is ready to build a domestic market and draw on the experiences of other countries with the PMR.
Documents & Presentations
|China: Final Market Readiness Proposal (MRP) Presentation||English||Mar, 2013|
|China: Design of Domestic Emissions Trading Scheme||English|
|China: Update on ETS (November 2014)||English||Nov, 2014|
|China: Update on National ETS Developments (March 2015)||English||Mar, 2015|
|China: Expression of Interest Letter||English|
|China: Expression of Interest (EoI)||English|
|China: Organizing Framework||English|
|China: Status of MRP Implementation (March 2014)||English||Mar, 2014|
|China: Recent Development of Chinese ETS||English||Mar, 2014|
|China: Update Carbon Market Developments (May 2012)||English||May, 2012|
|China: Update on ETS pilots||English||May, 2014|
|China: Final Market Readiness Proposal (MRP)||English||Feb, 2013|
|China: Data Management System and Lessons Learned||English|
|China: QA/QC Operations at the Facility-Level||English|
|China: Domestic Offset Scheme||English|
|China: Status and Challenges to Monitoring National GHG Emissions||English|
|China: Status and Challenges Monitoring Facility-Level Emissions||English|
|China: Interaction Between GHG Transaction Registries in Market Mechanisms||English|
|China: Shanghai Emissions Trading Scheme||English|
|China: International Review of Trading Schemes for Energy Savings and Carbon Emission Reductions||English|
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