China launches National Emissions Trading System

19 December 2017 – The National Development and Reform Commission (NDRC) announced the launch of the world’s largest nationwide carbon trading market. The Chinese ETS will initially cover the power sector, 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. The ETS will gradually scale up on sector coverage in order to include other high emitting industries such as cement, steel and aluminium. The gradual approach to the national ETS will begin with the development of national registration and trading systems, followed by a test phase and finally a functional system with formal market trading from 2020 onwards.

Companies that qualify for the national system will stop participating in the pilot projects. However, details on when trading will start, allowance allocation mechanisms, non-compliance handling and the timetable for increasing the sector coverage remain to be revealed by the NDRC.