Davos Agenda

China's plan to launch the world’s largest carbon trading scheme by 2025

china national emissions trade scheme climate change official government power sector industry pollution regional platform environment

The system was first pledged by President Xi Jinping ahead of the Paris climate accord in 2015. Image: Unsplash/Ruslan Bardash

Reuters Staff
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Davos Agenda

This article is part of: Race to Zero Dialogues
  • China’s national emissions trading scheme (ETS) is expected to eclipse that of the European Union to become the world’s largest carbon trading scheme.
  • The scheme is designed to include all major industrial sectors, from construction to power generation.
  • While first mentioned in 2015 ahead of the Paris climate agreement, technical problems have plagued the scheme, delaying it for a further 5 years.

China is targeting the launch of a nationwide emissions trading scheme during the period from 2021 to 2025, its top climate official has said, signalling another delay for the long-awaited carbon trading platform.

Technical problems and concerns over the accuracy and transparency of emissions data have dogged the scheme, whose first phase, covering the power sector, had been expected to launch this year.

“China’s carbon market will evolve from regional pilot programs to a national trading scheme and expand from single sector to multiple industries,” Li Gao, the head of the environment ministry’s climate change office, told a briefing.

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This included online trading and stable operation of the national emissions trading scheme (ETS), he added.

“The (2021-2025) 14th five-year plan is a big development period for the establishment of carbon trading,” Gao said.

The national trading system was originally pledged by President Xi Jinping ahead of the Paris climate accord in 2015.

In 2017, China announced the launch of the national ETS, designed to include all major industrial sectors, but there has been no trading yet, and relevant regulations have not been issued.

RacetoZero2020 China Climate Change Environment and Natural Resource Security
Monthly CO2 emissions from fossil fuels and cement in China. Image: Carbon Brief

By August, China’s pilot ETS in seven regions covered nearly 3,000 industrial emitters and traded 406 million tonnes of carbon-dioxide equivalent greenhouse gas, the ministry of ecology and environment (MEE) said.

Once the power sector starts trading, China’s national scheme is expected to eclipse that of the European Union to become the world’s largest carbon trading scheme.

Li added that the ministry was still revising the draft plan of emission allowance allocations, which had been modified to reflect the impact of the coronavirus pandemic, following feedback from local government and electricity generators.

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Related topics:
Davos AgendaChinaClimate ChangeFuture of the Environment
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