By Paul Davies, Andrew Westgate, and Bridget Reineking

China’s chief economic planning body, the National Development and Reform Commission (NDRC), has today announced the launch of its national Emissions Trading System (ETS). The ETS is an ambitious effort that likely will surpass every other emissions trading system in the world, including that of the European Union.

Many observers anticipated that China would launch the national ETS at the 23rd Conference of the Parties (COP 23) to the Paris Agreement in Bonn, Germany, in November 2017. However, Chinese officials at COP 23 merely previewed that the national ETS still required government approval. The delay in launching the national ETS likely stems from the system’s logistical challenges, including the following:

  • The need for timely and comprehensive emissions data for each industrial sector covered by the system
  • Issues relating to the determination of consistent methods for setting benchmarks for free allowances
  • Coordinating utilization of offset credits to satisfy compliance obligations during the initial compliance period