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[Feature] [THEMATIC REPORT] China’s Carbon Trade Scheme Debut

by Aiyang Zheng | 22-07-2021 18:44 recommendations 1

Carbon-pricing mechanisms already exist in about 45 countries worldwide. Now, China, the world’s largest greenhouse gases emitter, is following in. On 16th July, China's long-awaited national carbon emission trade scheme (ETS) made its debut, eclipsing the size of the EU's ETS, previously the world’s largest, to be the world’s biggest. With no doubt, China's ETS brings it a step closer to achieving its goal of carbon neutrality by 2060.


Back in 2013, China launched pilot schemes in seven provinces or cities including Shenzhen, Beijing, and Shanghai. However, the fragmented regional carbon markets coupled with falsified emission data by some emitters have forced the Chinese government to set up the national ETS on robust monitoring and reporting.


Currently, China's ETS, based on a cap-and-trade model, covers only coal and gas-fired power plants, and aims to expand to more industries such as oil, chemicals, etc. Unlike its counterparts in developed countries including the EU and Canada, China's ETS focuses on reducing the intensity of emission generation instead of absolute emission. In 2019, China emitted 27% of global carbon emissions, or over 10 billion tons of carbon dioxide. Nevertheless, its per capita emissions, about 6.8 tons of CO2 per person, are less than half those of countries including the United States, Australia and Canada.


Though it’s a positive sign that China's ETS has started, it does face several challenges and shortcomings. For instance, the initial allowances are too generous and the prices for them are too low. However, this in theory means higher future prices for carbon, resulting in opportunities for carbon investors too. Let's watching closely.



  • China Former E-gen Ambassador Aiyang Zheng


Yuseon Mentor

  • Yuseon Mentor says :
    Hi Aiyang,

    This is your mentor Yuseon:D

    What a good news! As China is the largest green house gas emitter,
    this news not only affects China but it is great news for the whole Earth.
    I also heard that China joined in in declaring Carbon Neutrality.
    I don't know if it would be possible by 2050 like other countries, but it is a
    good start that they joined in.

    For the better world to live in!

    Thanks for sharing:>
    Posted 02-08-2021 02:34

Debbie Mentor

  • Debbie Mentor says :
    Hi Aiyang,

    This is your mentor Debbie. :)
    It's surprising how despite China is producing 27% of world emissions, its per capita value is lower than many other countries! :o I hope with the introduction of China's ETS, China may become a more eco-friendly country. One thing, I wonder what you exactly mean by "reducing the intensity of emission generation instead of absolute emission". What is the difference?

    Posted 26-07-2021 07:26

Bindu Dhakal

  • Bindu Dhakal says :
    Hello Aiyang,
    Hope you are doing well,
    Thank you for your informative report on Chinas carbon trade,
    Keep writing,
    Posted 22-07-2021 20:03

Meena Pandey

  • Meena Pandey says :
    Hi Aiyang,
    It was good to know that there is a positive sign that China's ETS has started, but bad to know that it had to face several challenges and shortcomings.

    Thank you for this wonderful report.

    I want to give you a kind reminder to fill this form which will take just a minute so that we can get connected in the coming days too.

    Form link : http://forms.gle/G2Qa9iXjhDXxcWcr9



    Posted 22-07-2021 18:53

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