At the 2017 National Low Carbon Technology Conference starting on November 25, we learned that National Carbon emissions trading Market is ready for launch in terms of both policies and technology, and pending approval of the State Council. If approved, the market is likely to open by the end of this year.
According to Zhang Xin, Head of the Carbon Market Management Department of the National Center for Climate Change Strategy and International Cooperation, the center is directly under the National Development and Reform Commission, serving as a national strategic research institution and window for international cooperation and exchange for China in connection with response to climate change.
In September 2015, Chinese President Xi Jinping and US President Obama held talks in Washington, and later jointly released the U.S.-China Joint Presidential Statement on Climate Change, which indicated that China was scheduled to launch a national carbon emissions trading system, cover the key industries of iron and steel, electric power, chemicals, building materials, papermaking, and non-ferrous metals.
The Circular of the General Office of the National Development and Reform Commission on Performing Key Tasks for Launching the National Carbon Emissions Trading Market released on January 2016 also requires giving full play to the market mechanism's decisive role in allocation of resources for greenhouse gas emissions and requires that the central government, local governments and enterprises shall work together to facilitate development of the national carbon emissions trading market in an coordinated manner to ensure launch of the market as well as implementation of the carbon emissions trading system in 2017.
According to the circular, the national carbon emissions trading market will cover petrochemical, chemical, building materials, iron and steel, nonferrous metals, papermaking, electric power, aviation and other key industries in the first stage. However, a report on the Economic Information Daily in July claims that the national carbon emissions trading market will cover electric power, cement and electrolytic aluminum only instead of the previously reported eight main industries.
The national carbon emissions trading market is reportedly to shift from guiding policies for energy saving and emission reduction through government orders and subsidies to guiding policies based on the market mechanism, to allow firms and individuals to benefit from energy saving and carbon reduction, and drive firms to develop innovative energy saving and carbon reduction technology. As a result, the national carbon market will be designed with the orientation to relevant issues. On the one hand, the market will be implemented in phases. "We must formulate a plan for the deployment of the national carbon market according to different needs and at different stages." At the same time, we must adopt market mechanisms.
"We worked hard in creating markets for pollutant emission rights, sulfur dioxide emissions rights, water rights and others, we did not handle the relationship between the government and the market well, so many attempts lead to untrue markets because we failed to uphold the market mechanism.” said Zhang Xin. It is necessary to ensure fairness, just and openness. Especially, the technical specification and relevant policies shall be operable and motivate all players.
In 2011, the National Development and Reform Commission approved that Beijing, Shanghai, Tianjin and Chongqing as well as Hubei, Guangdong and Shenzhen to carry out pilots of carbon emissions trading. Carbon emissions trading were launched in 2013 in these regions. Therefore, it is important to ensure transition from "regional markets or pilot markets to the national carbon market."”
Zhang Xin suggested that the carbon market should be built in three steps. In preparation stage (2017), the carbon market operator should formulate rules for the carbon market; local governments should support the central carbon market authority by improving the capability building of participating enterprise, MRV (monitoring, reporting, and verification) of participating enterprises, and coordination between departments of the carbon market.
In the launch stage (2017-2020), the government should act as the supervisor and guide of the market in properly dealing with the relationship between the government and the market. Enterprises should manage the carbon emission rights as assets and establish a management system of carbon assets by market means.
Along the gradual maturity of the carbon market, it enters the growth stage (after 2020), when enterprises achieve their targets emission reduction in a cost-effective manner, while the government is able to control the total emissions.
As for the "three systems" to be developed for the carbon market --- the emission MRV system, the quota allocation and management system, and the carbon market supervision system, the emission quota allocation and management system is substantially ready for operation, as the State Council has approved the principals for setting the total of national carbon market quota and for quota allocation.
"At the same time, we have developed methods involving emission quota in eight key industries. We also tried out the quota allocation methods for electric power, electrolytic aluminum and cement production in Sichuan and Jiangsu provinces, and they are well acceptable to local governments and enterprises. On this basis, we will continue to improve the method for allocation of emission quotas in collaboration with the first key industries and enterprises which are included in the national carbon market.