China’s Emissions Trading Plan 2013-2015 ETS Pilots National infrastructure (offsets, registry) 2016-2020 ‘Launch’ of the national ETS Climate change law Policy issues Energy liberalisation Low liquidity Lack of market products Transition from pilots to national unclear Climate Challenges, Market Solutions
China’s current ETS’s consists of: 256 million people (18% of total population) 27% of 2010 national GDP Variety of regions/economic structures Climate Challenges, Market Solutions
China’s National ETS: Features First phase: 2017 to 2019 Will build off of 7 ETS pilots, but will be a new system Free allocation based on benchmarking and grandfathering, auctioning will commence around 2020 Allocation will begin next month (Oct 2016) Carbon leakage lists National registry, market intervention, innovation fund, and CCER offsets
China’s National ETS: Sector Coverage Power (generation, heat-power cogeneration, and grid operators) Non-ferrous metals (copper smelting, electrolytic aluminum) Petrochemicals (crude oil refining and processing, ethylene) Building production and materials (clinker, plate glass) Pulp & Paper Chemicals (methanol, ammonia, carbide) Aviation (civil commercial, cargo, and airports) Iron & Steel
IETA Views on China’s ETS National rules for all ETS elements still needed Foreign participation in ETS strongly encouraged Allow forward carbon trading Benchmarking better than grandfathering (allocation trap) Common infrastructure needed across exchanges CCER use is good, but need instruction on eligibility and percentage use
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