National Perspective of Chinese ETS

Transcription

1 National Perspective of Chinese ETS Zheng Xipeng SinoCarbon

2 China ETS Progress Good news and Bad news Own Opinions

3 Low Carbon Policy Target Target in 2020 Medium and longterm target Target Decomposition Nov. 22, 2009 By 2020 carbon emission per unit GDP decrease 40% -45%, compared to 2005 June INDC. China will cap its GHG emissions by By 2030 carbon emission per unit GDP decrease 60% -65%, compared to 2005 Oct The Fifth Plenary Session of the 18th Central Committee of the Communist Party of China Put low-carbon development and climate action in 13 th Five Year Plan. Work Program for GHG Emission Control in 13 th Five-Year Plan in national level and provincial level. Double Control on carbon density and total cap. 3

4 Recent Practices Low-Carbon Pilots Low-carbon pilot cities and provinces Low-carbon pilot industry Parks Low-carbon pilot communities National Policy and Strategy National GHG MRV System Low-carbon technology list Low-carbon products certification and labeling target decomposition and assessment ETS China Certified Emission Reduction 7 Carbon Emission Trading Pilots National ETS 4

5 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 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: million Free. Benchmark& Grandfather Beijing Guangdong Industrial sectors: Electricity, cement, iron and steel, petrochemical, other manufactures. Service industry and Public Transportation sector. Industrial sectors: Electricity, cement, iron and steel, and petrochemical Over 5,000 tons Over Over 20,000 tons million Free. Benchmark& Grandfather 3%-5%Auction Benchmark& Grandfather& Tianjin Industrial sectors: Electricity, heat, iron and steel, chemical, petrochemical, and oil and gas exploration Over 20,000 tons million Free. Benchmark& Grandfather Hubei Industrial sectors: Electricity, heat, nonferrous 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 million Free. Benchmark& Grandfather Chongqing Industrial sectors: Electricity, Aluminum, Ferroalloy, Calcium Carbide, Caustic Soda, Cement, Iron & Steel Over 20,000 tons million Application and Free allocation.

6 Daily Price in the Pilot Markets After two years development, prices in 7 pilots has between US$2~8/ton. Daily Average Price of Online Trading (US$/ton) /6/ /9/ /12/ /3/ /6/ /9/ /12/ /3/ /6/ /9/ /12/18

7 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 million tons, representing a trading value of US$225.3 million. Cumulative Trading Volume in the 7 Pilots (Million tons) Cumulative Trading Value in the 7 Pilots (Million US$) On-line Trading OTC On-line Trading OTC

8 Market Analysis At the first year, most transitions happened one month before compliance deadline. At the second year, covered entities started trading earlier. Monthly Trading Volume(Million Tons) Trading before May Trading between May and July Shenzhen Shanghai Beijing Guangdong Tianjin Hubei Chongqing Chongqing 2015 Hubei 2015 Tianjin 2015 Guangdong 2015 Beijing 2015 Shanghai 2015 Shenzhen 2015 Tianjin 2014 Guangdong 2014 Beijing 2014 Shanghai 2014 Shenzhen 2014

9 Compliance Rates Compliance result for 2014 is better than 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%

10 CCER 1.System Building 2.System Running Release CCER Regulation Start application projects in the pipeline at the end of Release Methodologi es CCER 市场 Release Application File Start registration. 339 projects registered at the end of Accreditation of Third Party Verification Bodies 体系建设 Establish Trading Centers Release Guidelines For DOEs Start to issue offsets. 25 million tons of CCERs issued at the end of Start trading and used in Compliance 10

11 Roadmap of National ETS After 2019 NDRC 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 Local DRCs 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 Enterprise 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

12 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 provinciallevel Registries activities.

13 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

14 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 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 Initial Allocation Plan Reporting and Verification guidance and templates provided Criteria for selecting third party verifiers provided Historical emission data collection will be finished by June 2016 Product based benchmarks will be applied in some sectors

15 Good News VS Bad News Good 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 stateowned corporations 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 15

16 Own opinions 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 marketoriented system Business opportunities from China ETS are similar with EU ETS, but the focus may be different. Chinese ETS cannot change the basic business rules of covered sectors, but some certain niche areas will be severely impacted. 6 Own Opinions 5 4 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. Large corporations, especially multinational corporations will be more active in ETS, small and middle-sized companies will take time to understand and participate. 16

17 Welcome to Discuss! Zheng Xipeng SinoCarbon Innovation and Investment Co. Ltd