THE CHINESE MARKET
China will launch its national Emissions Trading Scheme (ETS) in 2016, representing access to the biggest Carbon market in the world.
Starting from June 2013, China opened gradually its seven regional carbon market pilots, as announced from 2011. Each pilot covers a large city: Beijing, Tianjin, Shanghai and Shenzhen, or a province: Chongqing, Guangdong, and Hubei.
Europe has developed the first operational ETS, called EU ETS in 2005. However, the Chinese ETS will be twice the size of the EU ETS – currently the world’s largest operating ETS.
The Emissions Trading Scheme (ETS) is a ‘cap and trade’ system, an economic mechanism to put a cap on the carbon emissions that every company is allowed to produce in a year. In the EU, every nation has a set amount of free allowances related to its needs. Every firm can ‘trade’ these permits in a central market. If a company needs to emit more pollutants, it can buy allowances from those that haven’t used them at all because they have been able to reduce emissions.
The final goal is to incentivize firms to be below this limit by innovating and cutting their own emissions and selling their allowances. Most importantly, the total number of permits – the volume of pollutants every firm can emit in the air is lowered over time.
China Carbon has long and strong presence in China and can assist you with compliance for both markets.