China to Launch Nationwide Carbon Market Next Week

The emissions trading scheme will initially cover only the power sector, not heavy industry as planned, but will nonetheless become the biggest in the world.

China’s long-awaited nationwide emissions trading scheme (ETS) will be officially launched on 19 December, starting with the power sector only, according to a document from National Development Reform Commission (NDRC).

It represents a scaling back from the original plan for eight economic sectors to take part in the carbon market:  petrochemicals, chemicals, building materials, iron and steel, non-ferrous metals, paper, power, and aviation.

Nonetheless, it will instantly overtake the EU’s carbon market to become the world’s largest.  The power sector accounts for 46% of China’s carbon dioxide emissions, of which an estimated 39% will be covered by the ETS, according to data from World Resource Institute.

Explaining the change, Chinese officials said some industrial sectors did not have strong statistical foundations, and the system would involve constant testing and continuous adjustments.

Carbon futures trading will not be available at the launch stage of the scheme, Xie Zhenhua, China’s special representative for climate change, said during the UN climate conference in Bonn last month.  It is intended to create a cost for emitting carbon, not a platform for market speculation, he said.

An official at NDRC who asked not to be named said the conservative approach reflected the importance leaders attached to the overall stability of the country’s financial markets.

Read more at China to Launch Nationwide Carbon Market Next Week:  Officials