About the Project

The Sino-German project is jointly implemented by GIZ and the Ministry of Ecology and Environment (MEE) of the People’s Republic of China. The project is executed on behalf of the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) within the framework of the International Climate Initiative (IKI). The aim of the project is to strengthen the capacities of  China’s key institutions and stakeholders for the establishment and implementation of effective emissions trading systems (ETS) on regional and national levels in China. The introduction of this market-based approach in China is seen as a major contribution to the achievement of the government’s ambitious emissions reduction targets.

ETS in China

In 2009, China committed to lower its carbon dioxide emissions per unit of GDP by 40 to 45 per cent  by 2020 compared to the 2005 level. In preparation for the Paris Agreement in 2015, the country elevated its targets to reduce emissions per unit of GDP by 60 to 65 per cent by 2030 relative to the 2005 level, with a strong intention to peak emissions before that. In 2011, the Chinese government had already announced to gradually establish a national carbon market as one main instrument to tackle rising greenhouse gas (GHG) emissions.

This makes China the first emerging economy to introduce an ETS to limit GHG emissions, creating the world’s largest carbon market about double the size of the EU ETS in regards of carbon emissions. In 2013 and 2014, seven pilot ETS were launched in five cities (Beijing, Shanghai, Tianjin, Chongqing and Shenzhen) and two provinces (Guangdong and Hubei). Fujian Province was the last to establish a pilot carbon market in 2016.

End of 2017, NDRC officially launched the nationwide ETS, defining a gradual roll-out of the system in three phases. Initially, the power sector will be covered by the national ETS, including 1,700 stationary sources that emit more than 26,000 tons of carbon annually. This accounts for around 3.5 billion metric tons of carbon, approximately 35% of total national emissions.