Capacity Building to support the establishment of a National Emission Trading Scheme (ETS) in China
As of: June 2020
Objective and activities
A functioning Emission Trading System (ETS) is an effective market-based instrument to protect the climate. China introduced the world’s largest ETS at the end of 2017. Initially limited to the energy sector, its sphere of usage is gradually being expanded. The project supports the Chinese government in the preparation and introduction of the ETS through consulting and training. Various aspects of an ETS are covered, including the legal and procedural framework, market supervision, the definition of emission caps, allocation mechanisms, trading platforms and carbon registries. ETS-regulated companies, carbon exchanges and verification companies are to receive ETS training. The project also promotes China’s integration into international carbon market networks through international exchange. China is the first emerging market to introduce an ETS and serves as a model for other countries. Actual emissions trading is expected to begin in 2020.
State of implementation/results
- The world's largest emissions trading system is being built in China. The system will initially limit itself to the energy sector and regulate about three gigatons of CO2. In the future, further industrial sectors and civil aviation will gradually be included. The BMU has been supporting this development since 2012 via the International Climate Initiative.
- In preparation for the introduction of the national ETS, the project carried out two regional ETS training sessions in Zhengzhou and Wuhan for provincial government staff in Nov 2018 in partnership with the National Center for Climate Change Strategy and International Cooperation (NCSC). The main focus of the training was the use of monitoring plans for the measurement and reporting of emissions from the energy sector, as they are also used in the European Union Emissions Trading System. The two trainings formed the conclusion of a six-part training series in which more than 230 representatives of local governments and authorities as well as subordinate institutions were trained in the national ETS in 2018.
- Together with the International Carbon Action Partnership (ICAP), the project hosted an ETS Advanced Training in Haikou from 21 to 26 October 2018, aimed at young ETS experts from China who are directly involved in building the national ETS. The focus was on conceptual issues for the medium to long-term strengthening of the national ETS in China.
- From the 12th to the 14th of March 2019, the project organized a three-day expert workshop with employees of the Shanghai Environment and Energy Exchange (SEEE), the European Energy Exchange (EEX) from Leipzig and the German Emissions Trading Authority (DEHSt) for an exchange of experience for the operation and monitoring of emission trading platforms. Both the legal and regulatory issues of market supervision and technical aspects of the trading platform in market operations were the focus of attention. The SEEE is leading the construction of the national trading platform for the Chinese ETS, which will be based in Shanghai.
- The Ministry of Ecology and Environment (MEE) organised a nationwide training series on the national ETS from 23.10. to 18.12.2019. A total of 17 training sessions were held in 15 Chinese cities, attended by more than 4,400 employees from local government and energy producers. The organisation of the events was coordinated by the National Center for Climate Change Strategy and International Cooperation (NCSC) and supported by the project both financially and through its own presentations. The training series was the most comprehensive capacity-building measure of its kind to date and is an important milestone for the establishment of the national ETS and the forthcoming trading start in 2020.