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China in preparation for national emissions trading scheme (ETS) - 20th December


Following its announcement of the introduction of a national emissions trading scheme (ETS), China has continued to provide more details, revealing the scheme will begin in the energy sector before fully being implemented across all sectors from 2020.

China claims the scheme will create the world’s largest carbon market once it comes into effect, overtaking Europe’s ETS. Climate activists have welcomed this move from China where they have claimed it is a step in the right direction in combating climate change.

The idea behind the scheme will see high emitting companies buying and selling emissions credits, with a gradually falling limit. Initially the ETS will account for around 34-39% of China’s total emissions but this will continue to expand year on year. On top of this, China has claimed they will produce clean heating during the winter for northern cities through to 2021, in the hope this will avoid a deepening heating crisis.

The Environment Defence Fund expects the program to cover five million metric tonnes of CO2 from 2020, which would equate to approximately 15% of global emissions.

The program has initially begun across nine regions across China which will coordinate to establish the ETS. The hope behind the scheme is that it will become the primary mechanism for ensuring China reaches its goal to peak at total emissions by 2030, as set in the Paris agreement.

Currently there are no firm details as to when trading in the carbon market will begin, although reports claim it is not likely to begin until 2019. This may be because China is not ready to launch the ETS as of yet as experts claim the technical infrastructure required for national implementation is not in place. The price of the scheme is also unknown, with estimates claiming the initial price may be $7.50 per tonne of emissions with the figure set to rise.

In total there will be 19 carbon trading systems operating around the world once China has launched its program, this will cover nearly half of the world’s economic output. Once the scheme is up and running it may be able to link up with the other global markets.

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