China’sFiveYearPlanandEmissionsTrading

GlobalCross-SectorBusinessAssocia4on+130companies fromoil, electricity,banking, industry, tradersandbrokers,law,consul;ng,projectdevelopers,exchanges,verifiers,etc.…Collec4velyprovidingaglobalbusinessvoiceoncarbonmarkets

Principles:•  GHG trading systems = most efficient means of achieving environmental

objec;ves

•  LTpolicycertaintyisnecessarytoachievecost-effec;vereduc;ons

•  Use of offsets/linkages to a global carbon market are effec;ve ways tocontaincosts

Electricity(Enel,EDFEnergy,StatkraQ,SSE,AmericanElectricPower,E.ON,RWE,VaYenfall,ChinaLight&Power,PG&E...)Oil/Gas(Shell,Statoil,PetroChina,Eni,BP,GasNatural,Chevron,Total..)Finance(BAML,MorganStanley,StandardBank,BNPParibas,Commerzbank..)Industry(NorskHydro,BHPBilliton,DowChemical,HolcimLaFarge,Mitsubishi,Solvay,RioTinto...)TradersandBrokers(Mercuria,Ver;s,CFPartners,Evolu;onMarkets..)Legal(BakerMcKenzie,ReedSmith,Latham&Watkins,Dentons,NortonRose)Consul4ng(PwC,KPMG...)ProjectDevelopers(Greenstream,SouthPole..)Exchanges(ICE,EEX..)Verifiers(ERM,DNV,LRQA...)

Andmanyothers....collec4velyprovidinganeffec4vebusinessvoiceoncarbonpricing

New Zealand

Tokyo & Saitama RGGI

California

Quebec

Beijing

Tianjin

Shanghai Chongqing

Hubei

Shenzhen Guangdong

EUETS

South Korea Switzerland Washington

Rio de Janeiro

Sao Paulo

Kazakhstan

Taiwan

Vietnam

South Africa

Mexico

China US

Canada Alberta

Ontario

ETS in place

Subnational ETS in place

ETS Being Designed Carbon Tax with Offsets Being designed or in place

Linkages

Trinidad and Tobago

Ukraine

Hybrid Carbon Pricing

British Columbia

Australia

CHINA

Climate Challenges, Market Solutions

•  2014likelyChina’speakcoalconsump;onyearandChinanowin‘postcoalgrowth;’(Qi,Stern,etal)

•  Economicgrowthnowdecoupledfromcoaluseandpossiblyincreasedemissionstrends

•  11thFiveYearPlan(2006-2011)firsttoplacelimitsonmajorairpollutantsandenergyintensity;

•  12thFYPaddedinlimitsonCO2intensity;•  13thFYPmassiveshiQtoreplacecoalwithrenewablesandgas,

addsinETSandemissionslimits.

Climate Challenges, Market Solutions

2013-2015•  ETSPilots•  Na;onalinfrastructure

(offsets,registry)

2016-2020•  ‘Launch’ofthena;onal

ETS•  Climatechangelaw

Policyissues•  Energyliberalisa;on•  Lowliquidity•  Lackofmarketproducts•  Transi;onfrompilotsto

na;onalunclear

•  256millionpeople(18%oftotalpopula4on)•  27%of2010na4onalGDP•  Varietyofregions/economicstructures

Climate Challenges, Market Solutions

•  Firstphase:2017to2019•  Willbuildoffof7ETSpilots,butwillbeanewsystem•  Freealloca;onbasedonbenchmarkingandgrandfathering,

auc;oningwillcommencearound2020•  Alloca;onprocesswillbeginnextmonth(Oct2016)•  Na;onalregistry,marketinterven;on,innova;onfund,and

CCERoffsets•  Veryfewindustriesready(na;onalpoweristheonly

excep;on)

•  Power(genera;on,heat-powercogenera;on,andgridoperators)

•  Petrochemicals(crudeoilrefiningandprocessing,ethylene)

•  Chemicals(methanol,ammonia,carbide)

•  Iron&Steel

•  Non-ferrousmetals(coppersmel;ng,electroly;caluminum)

•  Buildingproduc4onandmaterials(clinker,plateglass)

•  Pulp&Paper

•  Avia4on(civilcommercial,cargo,andairports)

•  #1reason:securi;sa;onofenergysupplyanddiversity;à#1result:Carbonpriceappliesamaterialincen4vetoshiQawayfromfossilsandETSbringsemissionscontrols;

•  #2reason:SuccessfulCDMexperiencehadledtocarbonmarketsinChinabeing‘normal;’(Belis&Kerremans)

à#2result:LargelobbyingeffectamongstChineseCDMprojectownerstokeepac;vitygoing,ETSpilots;

•  Otherreasons:ProventrackrecordanddeepexperiencesharingfromEuropeanandCaliforniacarbonmarketsbringsconfidence;

•  Simplyput,governmentmustact(localairandwaterqualityconcernsareanindirecteffectbutbringmuch-neededpolicypressure)

•  Political momentum grew stronger for markets/pricing at COP 21 •  Interest beyond INDCs and Article 6 •  Germany leading a new G7 carbon market platform •  New Zealand declaration on carbon markets •  Carbon Pricing Leadership Coalition launched

•  Global Uptake in Carbon Pricing •  40 nations and +20 subnational regions have a carbon price •  Since 2015: Korea (ETS), Portugal (tax), Canada (ETS and tax),

Mexico (possible ETS) •  ICAO and aviation emissions’ caps

•  MBM hopefully this year

•  ChinawillusetheETS,alongwithabasketofotherpoliciesto

movetowardspeakingofemissionsanddecarbonisa;on

•  China’sincreasedclimateac;onswill—over;me—ledtoanormalisa;onincarbonpricingintheworld’slargestGHGemiYeraswell;

•  Europe’sleadershipanddeepexperiencehasundoubtedlyledtotheuptakeinemissionstradingandcarbonpricingworldwide.