Trade Begins Under Chinese National ETS | News | SDG Knowledge Center
China’s National Emissions Trading System (ETS) began operating on the trading platform operated by the Shanghai Environment and Energy Exchange (SEEE). The ETS aims to “contribute to the effective control and progressive reduction of carbon emissions in China and the achievement of green and low-carbon development”. It will support the country’s main mitigation goals of peaking carbon emissions by 2030 and achieving carbon neutrality by 2060.
Covering more than four billion tonnes of carbon dioxide (tCO2), which represents about 40% of the country’s national carbon emissions, China’s ETS is the world’s largest carbon market by volume.
Three years after its political launch in December 2017, the ETS debuted on July 16, 2021, with the opening price of carbon emission allowances (CEA) reported at CNY 48 ($ 7.41) per tonne. . The first trading day concluded with the closing price of 51.23 CNY (7.89 USD) per tonne. The total trade volume reached 4.1 million tons at CNY 210 million (USD 22.12 million).
The International Carbon Action Partnership (ICAP) reports that the prices of first transactions are higher than the average price of regional pilots over the past year, which Chinese media say is due to expectations of a ” Stricter and more extensive ETS. in line with the 2030 and 2060 goals.
While China’s national emissions trading system “could be an important market instrument to help the country meet its recently improved climate targets,” critics have questioned its effectiveness because of its design. based on “benchmarks”, its limited coverage and no cap on emissions.
In January 2021, the Chinese Ministry of Ecology and Environment (MEE) released key strategic documents on the ETS describing its administrative framework and rules for setting ceilings and allocation; monitoring, reporting and verification (MRV); and commerce and registry. At the end of June, the SEEE published detailed trading rules. In a press conference two days before the start of negotiations, the MEE’s deputy minister said that the national ETS market infrastructure, including the national registry and the trading platform, had been finalized.
According to ICAP, the ETS regulates more than 2,200 companies in the electricity sector, which emit more than 26,000 tCO2 per year, and its scope is expected to be extended in the future. Currently the ETS is intensity based with the cap adjusted a posteriori, based on actual production levels. Compliance obligations are also limited.
Existing Chinese regional ETS pilots are expected to gradually transition to national ETS, ICAP reports. As a first step, the pilots will continue to operate alongside the national ETS, covering sectors and entities not included in the national market. As more and more sectors are included in the national HTA, “the overlapping entities should be integrated into the national market”. [ICAP News Release] [China National ETS]