Emissions Trading in China Progress on the Path towards a Unified National System

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1 Emissions Trading in China PRESENTED BY Chen Zhibin SinoCarbon Feb. 2016

2 Bottom - Up ETS in China 1 Led by NDRC (National Reform and Development commission) One registry system ETS Development in China Pilot period: provinces and 5 cities, 7 separated markets Different policy designs Up-Bottom Unified MRV rules Unified allocation rules Unified compliance rules Unified monitor rules Provinces can enlarge coverage Provinces can allocate less free allowances Accumulated experience for national market. Transfer to united national market in 2017

3 ETS in China 2 CNY Shenzhen Shanghai Beijing Guangdong Tianjin Hubei Chongqing Million CNY Hubei Shenzhen Beijing Guangdong Shanghai Tianjin Chongqing Trading Value in Secondary market in 2015 Trading in Pilots [ 类别名称 ] [ 值 ], [ 百分比 ] Others; 33; 10% Hydro Power; 62; 18% Methane Recovery and Utilization; 43; 13% Carbon Prices Flow in China's ETS Pilots in 2015 Biomass; Solar 30; Photovoltaic; 9% 49; 14% Distribution of Registered CCER Projects by Category

4 ETS in China 3 Improved pilot schemes million tons 5,00 4,50 4,00 3,50 3,00 2,50 2,00 1,50 1,00 0,50 0, Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec. Comparison of trading volume and compliance rate in 2014 and 2015 Pilot Schemes Compliance rate 2014 Compliance rate 2015 Shanghai 100%(191/191) 100%(190/190) Shenzhen 99.4%(631/635) 99.7%(634/636) Trading before May Chongqing 2015 Hubei 2015 Tianjin 2015 Guangdong 2015 Beijing 2015 Shanghai 2015 Shenzhen 2015 Tianjin 2014 Guangdong 2014 Beijing 2014 Shanghai 2014 Shenzhen 2014 Trading between May and July Guangdong 98.9%(182/184) 100%(184/184) Beijing 97.1%(403/415) 100%(543/543) Comparison of trading volume in 2014 and 2015 Tianjin 96.5%(110/114) 99.1%(111/112)

5 ETS in China 4 Sino-US Joint Statement on Climate Change 2017 Launch National Market Paris Agreement Low-carbon development in China s long term soci-economic development planning National ETS confirmed at highest political level Sep. Oct. The Fifth Plenary Session of the 18 th Central Committee of the Communist Party of China Dec. Confirmed 2017 target, and put low-carbon development and climate action in 13 th Five Year Plan.

6 PART ONE Achievements and Progress of China s National ETS 5 Key Steps to Launch national ETS Progress at National Level Progress at Provincial Level National ETS Legislation Draft submitted to the Legislative Affairs Office of the State Council and is expected to get passed in second half of Provide necessary support. 24 sectoral reporting guidelines. Establishment of MRV system Rules and templates for reporting and verification. Third party verification guidance and templates, criteria for selecting third party verifiers. Start to build MRV system in provincial level. Progress on Specific Elements for National ETS Historical Emission Data Reporting and Verification Provide List of Covered Entities Requesting local DRCs to submit historical data reporting by end of June Provinces and 5 big cities are requested to provide initial list of covered entities by end of February Most of them already started work. Trainings for building capacity and selection of qualified third party verifiers are undergoing. Start to count qualified entities. Cap Setting and Allocation Plan Initial draft of allocation plan. Allocation is expected to take place in second half of Some local DRCs are collecting necessary data and test the initial plan. ETS Registry Registration already established. Need to learn how to manage and operate their respective registry administrative accounts, and facilitate opening accounts for market participants.

7 PART ONE Achievements and Progress of China s National ETS 6 Threshold Enterprises whose annual energy consumption exceeds 10,000 tons of Coal Equivalent in any year from 2013 to Framework of the National ETS is Sketched Out Sector 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) Operation and Management Structure NDRC is taking the lead and mainly responsible for regulations, policies and rules, while Local DRCs are mainly for implementing.

8 THANK YOU PRESENTED BY Chen Zhibin SinoCarbon Feb. 2016

9 Discussion International Carbon Action Partnership 9