European Commission (EuropeAid)

Supporting the Design and Implementation of Emissions Trading Systems (ETS) in China

ICF is leading the International Technical Assistance Team (ITAT) that aims to assist China in its efforts to meet its emission reduction targets and low carbon development in designing and implementing an emissions trading system (2014-2017). Other partners are Sinocarbon, SQ Consult and Ecofys. As of May 2016 over 1300 trainees were directly involved in the project and benefited from technical assistance and capacity building in multiple forms.

Through technical workshops and training materials, train-the-trainers, webinars, study assignments, expert roundtable discussions and peer-to-peer exchanges the project is facilitating the creation of a China ETS Knowledge system, enhancing institutional capacity and is enabling the establishment of China ETS communities of practice and related technical working groups. Main target groups of the project are senior officials from central and local government departments, senior managers from Chinese enterprises, and technical experts.

China National ETS is considered the single most important policy tool in China to reduce GHG emissions to allow the country to go through a necessary industrial and economic reform and also to support meeting Nationally Determined Contribution (NDC) targets.

Although the project does not directly write any policy, the project team works on a regular basis with those in charge of designing National ETS policy (and its technical building blocks) and those that will be implementing and/or rolling out the policy from 2017 onwards.

China is developing an ETS that reflects its own characteristics and circumstances, but there are multiple technical building blocks emerging with similarities to the European Union (EU) ETS:

  1. Sectoral coverage of China ETS is similar to EU ETS (main industrial emitters + aviation).
  2. National ETS is expected to have a set of improved MRV regulations (Monitoring, Reporting, Verification) building upon existing MRV sectoral guidelines and standards.
  3. A third-party verification framework is being established. 

To roll out ETS at national level and leverage on pilots’ experiences, Chinese provinces and regions will be developing their own implementation plans that have a similar function to roadmaps and action plans in the context of EU ETS. Last but not least, China national ETS is expected to have embedded in its design from 2017 a stability/ flexibility mechanism similar to the EU ETS Market Stability Reserve (MSR).

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By Renato Roldao
Consulting Director - Climate Change