China Takes Major Step toward Setting up National Carbon Trading Program

(BEIJING – Nov. 2, 2017)  The Chinese government today picked the entities that will lead two key systems of its forthcoming national carbon market. China Hubei Emission Exchange was selected by the National Development and Reform Commission (NDRC) to lead the development of the registration system for the emissions trading system (ETS), and the Shanghai Environment and Energy Exchange was selected to lead the development of its carbon-trading platform, also known as the exchange. The registry issues, tracks and verifies carbon emission allowances and credits, and is the crucial cornerstone of the ETS system. The carbon trading exchange is the platform where buyers and sellers trade allowances and credits.

“China’s decision of the registry and the exchange is a clear signal that the Chinese government is on track with the preparation and the phasing in of a national carbon market,” said Zhang Jianyu, Managing Director for Global Strategy at Environmental Defense Fund (EDF).

“EDF would like to send our sincere congratulations to the Chinese government on the selection of the two platforms, an important concrete step toward rolling out China’s national ETS. The announcement of Hubei and Shanghai to host the national carbon ETS registry and trading platform is exciting and we look forward to continuously deepening our cooperation and ensuring a successful launch and implementation of a national ETS in China,” said Zhang, who is based in EDF’s Beijing office.

Chinese President Xi Jinping announced in a 2015 Sino-U.S. joint statement that China would launch a national emissions trading system in 2017. NDRC’s climate change department chief Li Gao reaffirmed that commitment at a Oct. 31, 2017 State Council news conference. Alongside the news conference, NDRC released its “2017 Report on China’s Policies and Actions Responding to Climate Change,” which stated that the national carbon ETS is underway according to the timetable and plan, and will launch before the end of 2017.

“Today’s decision is another sign that China is stepping up its leadership on climate action, and that’s good news for the planet,” said Nathaniel Keohane, EDF’s Vice President for Global Climate. “Like an increasing number of countries, states, and provinces around the world, China is embracing a market-based approach that has the potential to drive down climate pollution and support greater long-term ambition.”

Background

Environmental Defense Fund (EDF) is the first registered international non-governmental organization under the Ministry of Environmental Protection in China. EDF was also involved in establishing China’s first pilot ETS in Shenzhen, and ever since, has been playing an active role in the planning, execution and evaluation of China’s regional pilot emissions trading systems and the forthcoming national carbon ETS. 

In China, EDF has provided extensive and in-depth training to over 5,000 officials and staff members from the Chinese central and local governments, key industrial associations, research institutes, and third-party verification agencies; organized over 10 international study and research tours; established a carbon emissions trading capacity building center and online training portal; set up four carbon trading training bases; and produced scores of training publications. EDF in China has provided technical expertise and a holistic facilitation of the national ETS’s mechanism design, policy planning, capacity building, public engagement, economic model analysis and operational evaluation.

EDF’s pioneering work is a result of 50 years of environmental stewardship with public and private sectors in the United States and around the world. EDF has extensive experience in the development of emissions trading systems, including the U.S. acid rain cap-and-trade program, the 1997 Kyoto Protocol, Europe’s ETS, and California’s cap-and-trade program, and also works with jurisdictions including Mexico on potential new emissions trading systems.