national perspective of chinese ets
TRANSCRIPT
Zheng Xipeng
SinoCarbon
National Perspective of Chinese ETS
China ETS Progress
Good news and Bad news
Own Opinions
Low Carbon Policy Target
3
Nov. 22, 2009
By 2020 carbon emission per unit GDP decrease 40% -45%,
compared to 2005
June 2015. INDC.
China will cap its GHG emissions by 2030.
By 2030 carbon emission per unit GDP decrease 60% -65%,
compared to 2005
Oct. 2015. The Fifth Plenary Session of the 18th Central
Committee of the Communist Party of China
Put low-carbon development and climate action in 13th Five Year
Plan.
Work Program for GHG Emission Control in 13th Five-Year Plan in
national level and provincial level.
Double Control on carbon density and total cap.
Target in 2020
Target
Decomposition
Medium and
long-
term target
4
National Policy and Strategy
Low-Carbon Pilots
Low-carbon pilot cities and provinces
Low-carbon pilot industry Parks
Low-carbon pilot communities
Low-carbon technology list
Low-carbon products certification and labeling
National GHG MRV System
ETS
China Certified Emission Reduction
7 Carbon Emission Trading Pilots
National ETS
target decomposition
and assessment
Recent Practices
Overview of 7 ETS pilots in China
Pilots Industries included
Inclusion standard
（annual emission）
NO.
industries Allowance
Allocation
methodology
Shanghai
Industrial sectors: electricity, iron and steel,
petrochemical, chemical, non-ferrous metal,
building materials, textile, paper making,
rubber and chemical fiber；
Non-industrial sectors: airlines, airports, ports,
shopping malls, hotels, commercial office
buildings and railway stations.
Industrial enterprises:
20,000 tons,
Non-industrial enterprises:
10,000 tons
191 160 million
Free.
Benchmark&
Grandfather
Shenzhen Industrial sectors: electricity, water,
manufacturing industries, etc.
Industries: over 3,000 tons；
Public buildings：20,000
square meters；
State organ office buildings:
10,000 square meters
Industries：635；
Buildings：197
30.5 million
Free.
Benchmark&
Grandfather
Beijing
Industrial sectors: Electricity, cement, iron
and steel, petrochemical, other manufactures.
Service industry and Public Transportation
sector.
Over 5,000 tons Over 1000 -
Free.
Benchmark&
Grandfather
Guangdong Industrial sectors: Electricity, cement, iron
and steel, and petrochemical Over 20,000 tons 184 388 million
3%-5%Auction
Benchmark&
Grandfather&
Tianjin
Industrial sectors: Electricity, heat, iron and
steel, chemical, petrochemical, and oil and
gas exploration
Over 20,000 tons 114 160 million
Free.
Benchmark&
Grandfather
Hubei
Industrial sectors: Electricity, heat, non-
ferrous metal, iron and steel, petrochemical,
chemical, cement, motor making, glass
making, chemical fiber, paper making,
medical industry, food and beverage
Energy consumption over
60,000 tons of standard
coal equivalent
138 324 million
Free.
Benchmark&
Grandfather
Chongqing
Industrial sectors: Electricity, Aluminum,
Ferroalloy, Calcium Carbide, Caustic Soda,
Cement, Iron & Steel
Over 20,000 tons 242 125million Application and
Free allocation.
Daily Price in the Pilot Markets
After two years development, prices in 7 pilots has between US$2~8/ton.
6.84
1.56
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
20.00
2013/6/18 2013/9/18 2013/12/18 2014/3/18 2014/6/18 2014/9/18 2014/12/18 2015/3/18 2015/6/18 2015/9/18 2015/12/18
Daily Average Price of Online Trading (US$/ton)
Transactions in the Seven Pilot Markets
As of Jan 31, 2016, the secondary carbon market for the 7 ETS pilots has had a cumulative
trading volume of 50.45 million tons, representing a trading value of US$225.3 million.
5.30 3.04 2.33
4.50
0.30
20.91
0.28
1.27
1.90 2.99
3.85
1.73
2.05
Cumulative Trading Volume in the 7 Pilots
(Million tons)
On-line Trading OTC
39.06
14.03 18.81 17.08
1.30
78.91
1.04
6.89
6.99
17.73
11.61
4.19
7.66
Cumulative Trading Value in the 7 Pilots
(Million US$)
On-line Trading OTC
Market Analysis
At the first year, most transitions happened one month before compliance deadline.
At the second year, covered entities started trading earlier.
Shenzhen 2014
Shanghai 2014
Beijing 2014
Guangdong 2014
Tianjin 2014
Shenzhen 2015
Shanghai 2015
Beijing 2015
Guangdong 2015
Tianjin 2015
Hubei 2015
Chongqing 2015
Trading before May Trading between May and July
0
2
4
6
8
10
12
Monthly Trading Volume（Million Tons）
Shenzhen Shanghai Beijing Guangdong Tianjin Hubei Chongqing
Compliance Rates
Pilots Compliance rate 2013 Compliance rate 2014
Shanghai 100%（191/191） 100%（190/190）
Shenzhen 99.4%（631/635） 99.7%（634/636）
Guangdong 98.9%（200/202） 100%（184/184）
Beijing 97.1%（403/415） 100%（543/543）
Tianjin 96.5%（110/114） 99.1%（111/112）
Hubei 100%（138/138）
Chongqing Around 70%
Compliance result for 2014 is better than 2013.
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CCER
CCER市场
体系建设
Release
CCER Regulation
Release
Application
File
Release
Guidelines
For DOEs
Establish
Trading
Centers
Accreditation of Third Party Verification
Bodies
Release Methodologi
es
1.System Building 2.System Running
2012.06
2012.09
2012.10
2013.01
2013.06
2013.07
2013.10 Start application. 1079 projects in the
pipeline at the end of 2015.
2014.3 Start registration. 339 projects
registered at the end of 2015.
2014.11 Start to issue offsets. 25 million tons of CCERs issued at the end of 2015.
2015 Start trading and used in Compliance
Roadmap of National ETS
NDRC
Local
DRCs
Enterprise
2014-2016 2017-2019
•Release National ETS Regulations
•Release technical guidelines and templates
•Strengthen infrastructure building
•Promote history data reporting and verification
•Promote allocation
•Phase I:
• Launch of National
ETS
implementation
•Phase II:
•Expand coverage
• Improve ETS
•Research linkage to
international ETS
•Organize capacity building
• Identify key enterprise list and organize history
emission reporting and verification
•Allocate allowance based on national rule
•Annual allocate allowance
•Annual reporting ,verification and
compliance
• Involve in national ETS improvement and
innovation based on local situation
•Participate in capacity building
•Develop internal carbon emission accounting
and reporting system
• Fulfill reporting obligation and cooperate on
verification
•Non-covered enterprises could also get
involved in carbon market through CCER
trading
• Fulfill emission reporting and compliance
obligation
• Improve carbon assets investment and
management
•Voluntarily participate in carbon market
trading and decrease emission reduction
costs
• Involve in ETS improvement and innovation
After 2019
Tasks for NDRC and Local DRCs
Coverage The Cap Allocation MRV Compliance
Registration
System
NDRC
Establish
sectoral
scope and
emissions
threshold
Establish
allocation
plan
Establish
allocation
plan
Establish
technical
guidelines
and
oversee the
qualification
of
verification
bodies
Set
compliance
guidelines,
including
punitive
measures
Establish
and manage
the system
Local DRCs
Determine
specific
coverage for
respective
region. Scope
can be made
broader at the
provincial
level
--
Implement
allocation
plan; DRCs
can
implement
more
stringent
allocation
plan than
the NDRC
mandate
Manage
reporting
and
verification
at provincial
level
Compliance
enforcement
and
managemen
t
Manage
provincial-
level
Registries
activities.
Major Progress at the national level
• Department Regulation came out.
• Promoting State Council Regulation.
Legislation
• Accounting and Reporting Guidelines Published.
• Reporting Started in some provinces.
• Verification related work started.
MRV
• System established.
• CCERs were issued, traded and used to compliance in pilots.
CCER
• System established.
• System is used for CCER transaction.
Registration System
• PMR has funded research projects on policy factors including coverage, cap setting, allocation, MRV, market monitor.
Policy Design
• Experts from EU, World Bank and other foreign organizations provided different training sessions.
• NDRC organized different level training sessions.
• Local DRCs started local training.
Capacity Building
Major Progress at the national level
Jan 2016 —— Notice on the Preparation for the Launch of the National ETS
Threshold Enterprises whose annual energy consumption exceeds 10,000 tons of
Coal Equivalent in any year from 2013 to 2015.
Sectors Power (generation, cogeneration and grid)
Petrochemical (crude processing, ethylene production)
Chemical (ammonia, carbide and methanol production)
Building material (cement clinker production, plate glass production)
Iron and Steel (crude steel production)
Nonferrous Metal (electrolytic aluminum, copper smelting)
Paper making (pulp production, paper making)
Aviation (passenger air transport, air cargo transport and airports)
MRV Reporting and Verification guidance and templates provided
Criteria for selecting third party verifiers provided
Historical emission data collection will be finished by June 2016
Initial
Allocation Plan Product based benchmarks will be applied in some sectors
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Good News VS Bad News
Market-oriented policies are
welcome in china
Steady Determination and
complete Plan from central
government
Convincible demonstration from
EU ETS and Pilots
Capacity and understanding
due to CDM and pilots
Activities from non-pilots
provinces
Positive attitude from state-
owned corporations
Good News
China's New Normal severely
impact some sectors and regions
in the short term.
Weakness of Legal basis
Difficulties due to the Complexity
and difference of regions
Some important details of
standards and regulations are still
not determined
Weakness of financial system
and Strength of financial
regulation
Technically complexity for
Transformation of pilot markets
Bad News
16
National ETS can be
launched in 2017，but
the exact time cannot
be expected.
Operation of china ETS
will be far from perfect at
the beginning，But it
must be a real market-
oriented system. Business opportunities
from China ETS are
similar with EU ETS, but
the focus may be
different.
Large corporations, especially
multinational corporations will
be more active in ETS, small
and middle-sized companies
will take time to understand
and participate.
Non-covered
organizations, such as
financial institutions, all
kinds of agencies, must be
active, but that will lead to
some troubles in the early
years.
Own opinions
Chinese ETS cannot
change the basic
business rules of covered
sectors, but some certain
niche areas will be
severely impacted.
Own Opinions
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Welcome to Discuss!
Zheng Xipeng
SinoCarbon Innovation and Investment Co. Ltd.
0086 13401175053
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