Environmental Defense Fund
emission trading in seven provinces (cities) including Beijing, Shanghai, Tianjin, Hubei,
Chongqing, Guangdong and Shenzhen, in preparation for the later "establishment of a
unified national carbon market."
The first pilot carbon market was launched in Shenzhen in 2013, and all seven pilots were
launched before the end of 2014. In addition, a voluntary regional carbon market in Fujian
went into operation in 2016. These provincial and city level carbon markets are still in
operation and provide experiential knowledge for the establishment of the national carbon
market in China. These markets will still operate once the National Market is open for
business.
In April 2016, China signed the Paris Agreement, which agreed that China would slash its
carbon dioxide emissions per unit of GDP by 60-65% in 2030 compared with 2005 levels. A
carbon market was identified as one of the key means to achieve this new NDC emission
reduction goal.
2017-2020: Building a National ETS
In 2015, the People’s Republic of China decided to build a national carbon market to limit
and reduce CO2 emissions in a cost-effective manner. In 2017, a teleconference for launched
the construction phase of the national carbon market. Originally set to start during the 13th
Five Year Plan
1
(2016-2020), the national carbon market would initially cover coal- and gas-
fired power plants.
2020-2021: Looking Forward to the Launch of a National ETS
Climate action faced significant challenges in 2020, as COVID-19 unleashed major impacts
on social and economic conditions in China. Yet, 2020 was a vital year to set targets and
priorities for the 14th Five-Year Plan (2021-25). Despite the challenges of COVID-19, China
not only honoured its climate commitments, but also announced a goal of peaking CO
2
emissions before 2030 and achieving carbon neutrality before 2060 in September. Together,
these commitments provide strong political assurances for the establishment of national
carbon market.
Since November 2020, the Ministry of Ecology and Environment (MEE) has issued five
documents: “The National Measures for the Administration of Carbon Emission Trading
(Trial),” “National Carbon Emissions Registration Transaction Settlement Management
Measures (Trial),” “2019-2020 National Carbon Emission Trading Cap Setting and
Allowance Allocation Implementation Plan (Power Generation Industry) (Draft for
Comments),” “Guidelines for Enterprise Greenhouse Gas Emission Accounting and
Reporting (Power Generation Industry) (Draft for Comment),” and “Guidelines for
Enterprise Greenhouse Gas Verification (Trial)," for public consultation. These documents
signal a sense of urgency on climate action that has not been seen since 2017.
On December 25,
2020, “The National Measures for the Administration of Carbon Emission
Trading (Trial),” was passed by the Ministry of Ecology and Environment, and this policy has
been officially enforced since February 1, 2021. On December 30, 2020, MEE also released
“2019-2020 National Carbon Emission Trading Cap Setting and Allowance Allocation
Implementation Plan (Power Generation Industry)” and “Name List of 2019-2020 Major
Emitting Entities in Power Generation Sector,” which require the listed 2,225 power
generation companies to be covered under the national carbon market, and their 2019-2020
allowance pre-allocation information to be submitted to the MEE by January 29, 2021. The
release of the above-mentioned documents marked the official launch of the first compliance