On 19 December 2017, China took the first step towards launching its carbon market - by allocating emissions quotas for a cap-and-trade scheme. The move follows seven regional pilots launched in 2013 and 2014, backed by central government. China's new nationwide scheme will apply to emissions from power plants producing more than 26,000 tons of carbon dioxide per year—which means almost all of China’s power plants will be included. Those power plants are estimated to produce 33% of China’s national emissions.
The volume of emissions from China’s electricity sector is so large, that even without including any other industries, the country’s carbon market will rapidly grow to become larger than the world’s current biggest, in Europe.
China’s market is expected to bring about a quarter of the world’s emissions under some kind of trading system. This would cover more carbon pollution than the EU’s market, whose yearly allowances are currently valued at 14 billion euros ($16.5 billion) a year.
The carbon market will make it easier for China to attract clean investments, as they will have a strong competitive position against fossil fuels.
Mark Brownstein, a vice president at the Environmental Defense Fund who specializes in energy and climate, said: “People are going to be surprised at how aggressively China moves to transition to natural gas over coal, how quickly it will move toward an electric-vehicle fleet and how readily it will continue to deploy renewable energy.”
Among developing countries, China is the first large economy to implement a carbon market. Though the market may not produce a reduction in emissions immediately, it sends a signal to the world that China is serious about doing its part to help the planet avoid catastrophic climate change, and creates a financial incentive for industry to cut emissions and aim for a low-emission future.
This signal was also spotted by Carol Brighton:
EnergyProgress #SignalofChange: "China's move to create the world's largest #carbonmarket is yet another powerful sign that a global sustainability revolution is underway," says @algore https://t.co/c2K10qbPJl
The government did not issue a hard timeline, and regulations and other details still have to be worked out. But environmental groups that worked with the government said they could emerge in the next couple of years. "Everything is gradual, step by step," said Li Junfeng, a senior government adviser on the carbon market plan.