Emissions Trading Worldwide

“China’s intention to launch a unified
national carbon market by 2017 was
unequivocally confirmed at the highest
political level.”
5.00
3.75
2.50
million tons 2014 2015
State Council (LAO). The NDRC are endeavoring to put the ETS legislation
into the 2016 work plan of LAO, with the aim of passing a
national ETS regulation in the same year.
The establishment of an offset mechanism is an important
element in the development of an institutional framework for an
ETS. 2015 is the first year that credits generated by China Certified
Emissions Reductions (CCER) projects have been surrendered for
compliance in the pilot schemes. The successful use of these credits
indicates that both the offset system and the national registry
are ready for the national market. As of 25 December 2015, there
were 1078 CCER projects in the pipeline, of which 339 projects have
been approved for registration (see Figure 4), and 83 projects with
about 25 million tons of CCERs have been issued.
pilot schemes
Shanghai
Shenzhen
guangdong
beijing
Tianjin
Table 1: Comparison of compliance rates in 2013 and 2014
compliance rate 2013 compliance rate 2014
100% (191/191) 100% (190/190)
99.4% (631/635) 99.7% (634/636)
98.9% (182/184) 100% (184/184)
97.1% (403/415) 100% (543/543)
96.5% (110/114) 99.1% (111/112)
Intense preparations needed throughout 2016
With high-level political commitment confirmed, and the national
ETS legislation under development, it is critical that preparations
for system design and implementation progress through 2016.
In particular, historical data reporting and the preparation of an
allowance allocation plan will need to be advanced. In 2015, the
NDRC held a number of working conferences with provincial
authorities aimed at advancing technical work at the local level.
Then, on 11 January 2016, the NDRC released the landmark Notice
on Key Works in Preparation for the Launch of the National ETS 2 (the
Notice), which paves the way for local level work in preparation
for the launch of the national ETS in 2017. In the Notice, the NDRC
gives provincial authorities a clear mandate to prepare for the
national ETS. It outlines the scope of the national system and provides
important information for local level preparation, including
key steps, a timeline for implementation, clear technical guidance,
and templates for data reporting and verification.
The Notice defines the scope for historical data reporting and
the selection of covered entities. The power sector (coal-fired and
gas-fired power generation, combined heat and power generation,
and grids), petrochemical production (crude oil processing,
ethylene production), chemical production (ammonia, carbide,
and methanol production), building materials (cement clinker and
plate glass production), crude steel production, nonferrous metals
(electrolytic aluminum, copper smelting), pulp and paper production,
and aviation (passenger air transport, air cargo transport
and airports) are the first industries to be included. Within these
sectors, legal entities whose annual energy consumption exceeds
1.25
0.00
Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.
Figure 3: Monthly trading volume comparison in five pilot schemes.
10,000 tons of standard-coal-equivalent in any of the years 2013,
2014, or 2015, are to be identified by provincial authorities and
compiled into a list of potential covered entities.
The provincial authorities are then requested by the NDRC to
collect verified historical data reports from the potential covered
entities, in order to prepare a national allocation plan. To guide
this process, the NDRC has issued reporting guidelines for covered
sectors. 3 The NDRC has also prepared additional reporting templates,
verification guidelines and templates to facilitate historical
data collection. Potential covered entities are requested to report
historical data for the period from 2013–2015, and all historical
data reports are to be subject to third-party verification.
To further facilitate data reporting and verification, the NDRC
has created a national MRV Q&A platform. Stakeholders will be
able to ask technical questions, either via an online system or a
telephone helpdesk, and all official answers will be posted on the
platform website. As data reporting and verification will take place
in parallel across the various provinces, it is important to provide
centralized guidance for using the reporting and verification
guidelines and templates. Such guidance will ensure that rules are
implemented consistently, ensuring, for example that “a ton is a
ton” across all provinces.
Capacity building is also a critical task for 2016, considering the
limited experience of stakeholders, particularly in the non-pilot
regions. Both the NDRC and the provincial authorities will need to
secure the necessary resources to enhance capacity building, and
strengthen policy research and consultation.
Others 10% Methane Recovery and Utilization 13%
Wind Power 36%
Figure 4: Distribution of registered CCER projects by category
Hydro Power 18%
Biomass 9%
Solar Photovoltaic 14%
international carbon action partnership
17