German-Chinese Cooperation on Emissions Trading, Market Mechanisms and Mitigation of Industry-Related N2O Emissions
As of: September 2021
A functioning emissions 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. The project supports the government of China in introducing and refining the ETS by providing advice and training. The focus is on the legal-institutional framework. It also trains private sector participants in the ETS on practical implementation issues. In addition, the project supports the planning and implementation of measures for a sustainable reduction of N2O emissions from the industrial production of nitric acid, adipic acid and caprolactam. The approach includes advice, studies, and knowledge exchange on policy instruments and mitigation technology as well as on a robust MRV system. Mitigation potentials of industry-related N2O emissions are not yet included in China's climate goals and provide a basis to increase the level of ambition.
State of implementation/results
- The world's largest emissions trading system (ETS) is being created in China. The legal basis came into force in February 2021. In the initial phase, the system is limited to the energy sector and regulates around 4.5 gigatons of CO2. In the future, other industrial sectors and civil aviation are to be gradually included. The BMU has been supporting this development since 2012 through the International Climate Initiative.
- Together with the German Emissions Trading Authority (DEHSt) and the China Hubei Carbon Emission Exchange (CHEEX), the project organized a virtual workshop on 19.06.2020 on conceptual issues for the establishment and operation of an emissions trading registry. CHEEX is responsible for the central register of the national ETS in China. The registry is an essential part of the emissions trading system and provides information on who is in possession of which emission allowances.
- The Ministry of Ecology and Environment (MEE) organized 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 organization 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 before the start of the first commitment period.
- From 12 to 14 March 2019, the project organized a three-day expert workshop with the Shanghai Environment and Energy Exchange (SEEE), the European Energy Exchange (EEX) from Leipzig and the DEHSt for an exchange of experience on the operation and monitoring of emissions trading platforms. The workshop focused on legal and regulatory issues of market supervision as well as technical aspects of the trading platform in market operation. SEEE is leading the development of the national trading platform for the Chinese ETS, which will be located in Shanghai.
- In preparation for the introduction of the national ETS, the project together with the NCSC conducted two regional ETS training courses in November 2018 in Zhengzhou and Wuhan for employees of the provincial administration. The training focused on the use of monitoring plans for the measurement and reporting of emissions from the energy sector, as applied in the European Union Emissions Trading Scheme. The two training sessions marked the end of a six-part training series in which more than 230 representatives of local governments and authorities and subordinate institutions were trained on the national ETS in 2018.