Emission Trading System

Spotlight Issue: Announcement of Emission Trading System (ETS)

On December 19, 2017, China officially announced the layout of the nationwide China Emission Trading System (ETS). The system will initially cover only the power sector, which contributes approximately one third of the national carbon emissions, and gradually will expand to include other sectors. Once fully operational, it will become the world’s biggest carbon trading system, signifying a big step towards China reaching its climate goals.

However, whether the ETS will be effectively implemented depends on the transparency of the carbon data. Although the National Development and Reform Commission of China has included information disclosure as a chapter of the Regulations of Carbon Emission and Administration (draft submitted for review), the detailed information of the disclosure requirement has not yet been legislated.

According to the Institute of Public and Environmental Affairs (IPE), a non-profit environmental research organization in China, the lack of data transparency might lead to the limited ability of the market-based price-predicting mechanism, which accordingly, could result in the inaccuracies of carbon pricing and the unjust allocation of the carbon credits.

The future establishment of a carbon disclosure system would allow government to allocate the carbon credits based on the industrial emission level, as well as monitoring the industry performance. “The setting up of a monitoring, reporting, and verification system”, stated by Jeremy Schreifels, an expert on climate policy, “would enforce compliance, drawing from the experience of the EU ETS.”

Status: Right Direction

The Emission Trading System, is predicted to reduce the CO2 by 27.5% compared to the usual scenario, which would contribute the pledge of peaking the still-growing emissions by 2030. However, its effectiveness will depend on the careful carbon pricing and credits allocation, which will require the corporations to disclose their carbon data.

Take Action

Personal letters, emails and phone calls have the most influence and impact on decision makers and policy makers so we encourage you to contact each individual directly.

You can accelerate the establishment of a disclosure system by sending the following message to the contact below:

We congratulate the government on the establishment of the Carbon Trading System, showing the global leadership towards achieving the Paris Agreement and transition to a low carbon economy. However, we urge you to facilitate the establishment of the related legal system to enforce corporate data disclosure to ensure the effective implementation of the ETS.

Lifeng He, the director of National Development and Reform Commission, through the flowing website:

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