China’s National ETS Open for Business

The China National Emissions Trading Scheme (ETS) is now open for business after the system’s core pieces have been put in place. The release and promulgation of the Measures for the Administration of National Carbon Emission Trading (Trial) and the 2019-2020 Implementation Plan for National Carbon Emission Trading Total Allowances Setting and Allocation (Power Generation Industry), by the Ministry of Ecology and Environment (MEE) is an important step in the world’s largest ETS and a crucial component for China to achieve early carbon peaking and eventual neutrality. According to the Administration of National Carbon Emission Trading (Trial), the first compliance cycle of the national ETS (power generation industry) is through January 1st to December 31st 2021, which will cover the emission of 2019 and 2020 for the 2,225 key entities in the industry. 

Zhang Jianyu, Vice President, Environmental Defense Fund China
“This is one of the most exciting developments for the world’s largest carbon market in the recent rollercoaster year. The release of the 2019-2020 ETS allocation Plan (Power Generation Industry), which includes 2,225 entities in the power generation industry, is a signal that China’s national ETS is officially opened for business. It retrospectively shows that the carbon emission of the 2,225 entities have been explicitly included in the national ETS since January 1st 2019.    

“The ETS is essential in reducing emissions and the associated costs, while also formulating an effective carbon pricing signal, which lays a solid foundation for the low carbon transition of society as a whole. As a result, the ETS will become an effective tool to help China achieve carbon peaking before 2030 and carbon neutrality by 2060 – goals that Chinese President Xi Jinping pledged in 2020. 
 
“As a long-term and trusted Chinese government partner in the buildup of the national ETS, EDF will continue to help China further improve the system, and is looking forward to the inclusion of more industry sectors, and the introduction of the offset mechanism. We hope more active market participation and diversified ETS trading products will help catalyze more climate investment and result in earlier and deeper emissions reductions”.

• Zhang Jianyu, Vice President, Environmental Defense Fund China

Background
Measures for the Administration of National Carbon Emission Trading (Trial) published by the Ministry of Ecology and Environment