Capacity Building for the Establishment of Emissions Trading Schemes (ETS) in China

Objective

  • To strengthen the capacity of key stakeholders involved in ETS design and implementation at the national and local level
  • To provide policy options regarding the preparation and establishment of ETS to China’s key institutions and involved stakeholders
  • To enhance the dialogue between political decision-makers and the private sector and sets out to involve all stakeholders, especially local stock exchanges, financial service providers, as well as verification and trading companies and industry

Description

The Sino-German project is jointly implemented by GIZ and the National Development Reform Commission (NDRC) on behalf of the Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMUB). The project supports knowledge and experience exchange between Chinese, European and German experts and key stakeholders related to emissions trading. The introduction of this market-based approach in China is seen as a major contribution to the achievement of the government’s ambitious emissions reduction targets.

China has published new greenhouse gas (GHG) reduction commitments in preparation for the 2015 Paris climate negotiations. The country will reach its peak emissions level by 2030. It also intends to reduce its emissions per unit of GDP by 60 to 65 per cent during the same period. China had already committed itself to a 40 to 45 per cent reduction in emissions intensity by 2020. An emissions trading scheme (ETS) is being introduced on a gradual basis in order to achieve these targets.

This makes China the first emerging economy to launch a trading scheme to limit GHG emissions. A pilot phase for this complex market instrument has been running since 2013 in Beijing, Shanghai, Tianjin, Chongqing and Shenzhen, as well as in Guangdong and Hubei Provinces. The project provides advice and training to further support the nationwide roll out of the ETS, which is scheduled for 2017.

Field of intervention

  • The project provides technical advice and supports the strengthening of capacities for the development, establishment and implementation of ETS in China. The exchange of experiences and know-how between Chinese, German and European institutions is supported through advisory sequences and training measures such as study tours, workshops and job shadowing.
  • On the local level, the project addresses the pilot regions and assists local institutions in charge of ETS implementation in testing of and making adjustments to the ETS after its establishment. Companies covered by emissions trading as well as further participants in the trading (such as financial service providers, verifiers) are also included.
  • On a national level, the Domestic Policy and Compliance Division of the Department of Climate Change of NDRC is supported. In addition, demand-driven support in assessment and evaluation of the experiences made within the pilot schemes is provided, especially regarding legislative-institutional questions.

Targeted beneficiaries

  • In preparation of the national ETS roll-out, representatives of Chinese non-pilot provincial authorities have participated in continued trainings on emissions trading. As the pilot regions have begun to successfully trade emission certificates and gain initial experiences, the project is stepping up its efforts to assist the Chinese Government in its preparation and establishment of the national ETS. These efforts concentrate on establishing the necessary legislative framework and national institutions.
    Looking forward, the project shall support in the set-up and optimisation of local trading platforms and prepare local government, verifiers and enterprises for their roles and ways to best participate in the national ETS. Knowledge exchange between European industry representatives and national experts will play a key role in the project.

Achievements

  • The project is currently focusing on the pilot regions, but is also supporting national level ETS development. Among others, the project provided technical advice on the design of carbon registries and the establishment of trading platforms in the regions. Study tours to Germany and Europe, as well as experts visits to China, helped to establish an expert exchange and deepen the knowledge of institutions and procedures in the European ETS. In order to involve all relevant stakeholders, including the private sector, the project also provides trainings for companies subject to ETS in the form of an intensive dialogue between European and Chinese industry representatives focused on sharing knowledge and experiences to prepare Chinese companies for the challenges of emissions trading.
    The project strives to support Chinese stakeholders to draw on the lessons learnt in Europe and to establish a carbon market which suits China’s circumstances.
COUNTRY

China

DURATION

July 2012 - March 2020

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