A look at China’s pilot carbon markets towards 2017 national ETS

On September 25th, Chinese President Xi Jinping officially announced the launch of a nationwide ETS scheme in 2017. China, that pledged to peak its emissions by 2030 and decrease carbon intensity by 60-65% from 2005 levels by the same year, is on track to meet its targets, researchers state. The government chose carbon market as one of the tools employed to accomplish its objective of mitigation. According to the last Xi Jinping’s declaration, the national ETS will cover the main industrial activities: power, iron and steel, chemicals, cement, paper and nonferrous metals sectors.

Crucial elements have not been regulated yet, such as the criteria for setting the carbon cap, the procedure of monitoring emissions and the type of allowances to be allocated. On this matter, concerns have been raised about the real possibilities for the national ETS to be implemented for 2017. The start of the nationwide ETS was originally meant to take place in 2016, but was postponed several times by Chinese government, thus meaning that an extension of the current regional schemes until 2017 is likely to be established.

The national program, however, can rely on China’s experience with its seven existing regional carbon-trading schemes. The pilots have been approved by the National Development and Reform Commission (NDRC) in late October 2011 and have started operations in 2013. The schemes involve two big cities (Beijing and Shanghai), the industrial municipalities of Tianjin and Chongqing, the provinces of Guangdong and Hubei, and the special economic area of Shenzhen.

Source: SEI, 2012


According to a report by IETA, Chinese pilots jointly form the second widest carbon market in the world, with 4 million tons of quotas (CCERs, Chinese Certified Emissions Reductions) traded as of late 2014. The ETSs certainly present some common features, such as the period of transactions and the type of offsets, but local administrations are given a notable leeway in their implementation, particularly in determining the number of interested sectors (which varies from 4 in Guangdong to 26 in Shenzhen), the kind of compliance system in use and the amount of involved enterprises (from 114 in Tianjin to 635 in Shenzhen). As a consequence, regional markets show considerable differences in the emissions covered, the scope of transactions and the average price of quotas.

Pilot programme Volume traded (tons) Average price (yen / ton) Turnover (yen)
Beijing 200 39.70 7940,00
Shangai 280 13,80 342829,4
Guangdong 280 16,50 495000
Shenzhen 280 41,50 85000
Tianjing 280 23,06 11585
Hubei 74953 23,05 1934207,42
Conghqing 0 0


Sources: Beijing: www.bjets.com.cn; Shanghai: www.cneeex.com; Guangdong: www.cnemission; com;
Shenzhen: www.cerx.cn; Tianjin: www.chinatcx.com.cn; Hubei: www.hbets.cn; Conghqing  http://www.cqets.com.cn


So far, NDRC  has done a lot of preparatory work for launching the nationwide ETS. For instance, starting from January 2014, it set a reporting procedure requiring entities emitting 13,000 tCO2e or consuming more than 5,000 tons in 2010 to refer on their carbon emissions annually.



(Image: Air pollution in Anyang City, Henan Province, China, Jan. 2015. Photo credit: V.T. Polywoda on Flickr)