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Updates on Developments of China’s National ETS LIU Wenbo Ha Noi 18 October, 2016 1
Updates on Developments of China’s National ETS
LIU Wenbo Ha Noi
18 October, 2016
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PART ONE Overall Plan of China’s National ETS
Roadmap of National ETS
NDRC
Local DRCs
Enterprise
2014 2014-2016 2017-2019
• Release National ETS Regulations • Promote history data reporting and verification • Implement allowance 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
National ETS Regulation by State Council
Measures on GHG emission
reporting
Measures on verification
entity
Measures on trading
behavior
Measures on offset Legislation and
its Supporting Rules are the foundation of the National ETS
PriorityistopasstheStateCouncilETSRegula9onü 2Stakeholdersmee9ngs,1withover20ministries,1with
representa9vesofover18industrysectorsü Legisla9veAffairsOfficesofStateCouncillistedETSRegula9onontheir
2016workplan
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PART TWO Framework of the National ETS
Coverage and Scope of the national ETS
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Sectors Sub-sectors
Petrochemical CrudeprocessingEthyleneproduc9on
Chemical Chemicalrawmaterial/Fer9lizer/Pes9cideProduc9on/Synthe9cmaterial
BuildingMaterial Cementclinkerproduc9on Plateglassproduc9on
IronandSteel Crudesteelproduc9on/Steelrolling
NonferrousMetal Electroly9caluminumCoppersmel9ng
Papermaking Pulpproduc9onPapermaking
Power Genera9onCogenera9on Grid
Avia@on PassengerairtransportAircargotransportAirports
u Threshold:EnterpriseswhoseannualCO2emissionsexceeds26,000inanyyearfrom2013to2015.
Na@on
EnterpriseN
Enterprise1
EnterpriseN
Enterprise1
ProvinceA
ProvinceG
STEP1LocalDRCcollectsdataatprovinciallevel
STEP2LocalDRCreportsdatatoNDRC
STEP3NDRCdecidesthecap,consideringGDPgrowthandreduc9oncontribu9ons,higherthanna9onalemissionreduc9ontargets
STEP4NDRCdecidesthecapofeachprovince
STEP5LocalDRCallocatestheallowancetoenterprises
Emissions Cap of the National ETSC
benchmark
ü Production ü Benchmark
ü Production ü historical emission
intensity ü Annual reduction
Rate
Allocation plan of the National ETS
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Historical Intensity
1 • 24 Guideline for Monitoring and Reporting Verification Guidelines • Accreditation Rules for Third Party Verifiers
3 NDRC to announce list of nationally accredited 3rd party verifiers in 2017
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MRV system of the national ETS
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• Provincial DRCs select qualified verifiers • Provincial DRCs organized reporting and
verifications according to above rules
Registry System
Main registry
Backup registry 2
Backup registry 1
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Regulatory Bodies of the National ETS
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NDRC Local DRCs
coveragescopeandthreshold Coverage Iden9fyandproducelistofcoveredenterprises
Decidethecap Thecap -
Establishna9onalalloca9onplan Alloca@on Implementalloca9on
Establishmethodologiesandstandards MRV Organizerepor9ngandverifica9on
compliance rules, including punitive measures Compliance Compliance enforcement and
management
Establish and manage the system Registration System
Manage provincial-level Registries activities.
Establish trading rules, specify the trading institution Trading
supervise the transactions within the region
Offsetting under the National ETS
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u Thena9onalCCERsystemhasbeenopera9ngforover3years,suppor9ngoffsetmarketofthepilots.
u Windpower,solarPV,hydropowerandhouseholdbiogasarethemostpopularprojecttypes
Wind35%
SolarPV19%
Householdbiogas16%
Hydro13%
Biomassgenera@on
6%Other11%
IssuedCCERbyprojectnumbers
Wind24%
SolarPV5%
Householdbiogas12%
Hydro25%
Biomassgenera@on
5%
Other29%
IssuedCCERbyvolume
Trading Platforms of the national ETS
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u MarketoversightatCentralLevelu SecondaryTradingMarketinExchangesu 9ExchangesalreadyapprovedbyNDRC
Ø 7inthepilotregionsØ 2innon-pilotregions,1inSichuanand1inFujian
u Exchangeswillgraduallydevelopspecificbusinessmodels,withsomefocusonCCERtradingandothersfocusonfinancialda9ves
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PART Three Progress of China’s National ETS
Capacity Building
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u 7na9onalETStrainingcentersestablishedu Unifiedna9onaltrainingmaterialspreparedu MoreETStechnicalcentersaretobeestablishedu Itises9matedOver22,000peoplehavebeentrainedinnearly200trainingsessions
u Targetedgroupsincludeofficials,enterpriserepresenta9vesandthirdpartyverifiers
Software
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ElectronicRepor@ngSystem
Supports:• Datarepor9ngby
enterprises• Verifica9onbyDOE• Governmentdata
management
NCSCSinoCarbon
Market Oversight
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u GeneralPrinciple:TerritorialJurisdic9ons,toberegulatedbylocalauthority
u SpecialOccasions:ü TheAvia9onSectorü ElectricVehicles
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PART Four From Pilots to Unified National ETS
Transitional Arrangements
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u UnifiedNa9onalETSü UnifiedRulesonMRVü UnifiedRulesoncapseangandalloca9onü UnifiedRulesonTradingü UnifiedThresholdforCoverage,enterprisescoveredunderpilot
programsmaycon9nuetobecoveredunderna9onalETSu CarryoverofPilotsAllowances?
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PART Five Outlooks and Expectations
Price of Carbon
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AveragePrice（
US$/ton
）
DailyAveragePriceofOnlineTradinginPilots(US$/ton) Shenzhen Shanghai Beijing Guangdong Tianjin Hubei Chongqing
u Pricingthecarbonü ETSforKeyIndustrialSectorsü CarbonTaxfornon-ETSsectorsager2020
u CarbonPrice:30RMBandexpec9ngtobeashighas300RMBperton
Trading Products
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Allowances CCERs EVAllowances
SpotTrading
Deriva@vesTrading
Pricing Signal
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u MainlyFreeAlloca9oninthebeginningü EstablishingtheETSandmakeitopera9onalü Sendingsignaltoenterprisesthat“CO2emissionhasacost”
u Graduallyincreaseauc9oning
u Carbonpriceplayingasmarketsignalforlowcarbontransi9oninChina
