Research on the Prospect of the Building Sector in the Offsetting Mechanism for China’S Carbon Market the GIZ Mission

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Research on the Prospect of the Building Sector in the Offsetting Mechanism for China’S Carbon Market the GIZ Mission Research on the Prospect of the Building Sector in the Offsetting Mechanism for China’s Carbon Market The GIZ Mission As a federal enterprise, GIZ supports the German Government in achieving its objectives in the field of international cooperation for sustainable development. Published by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH Registered offices Bonn and Eschborn, Germany Capacity Building for the Establishment and Development of a Technical and Institutional Infrastructure for Achieving China’s 2020 Targets Sunflower Tower 860 37 Maizidian Street Chaoyang District 100125 Beijing PR China website: www.ets-china.org Responsible Person Constanze Boening Authors Zhou Sheng, Duan Maosheng Institute of Energy, Environment and Economy, Tsinghua University Beijing, November 2014 Disclaimer The findings and conclusions expressed in this document are entirely those of the authors and do not necessarily represent the views of the GIZ or the Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety of the Federal Republic of Germany. The information provided is without warranty of any kind. Overview This report contains two parts - Chapters One through In the second section on the inclusion of the building Three, which provide a systematic review of the offsetting sector in the offsetting mechanism in the Chinese carbon mechanism in the Chinese carbon market and the second market, this report provides the following: part, Chapters Four to Seven, which focus on analysing the prospects for the building sector in the offsetting 1) a quantitative analysis on China’s building energy mechanism for the Chinese carbon market. consumption and the related emission reduction potential, The review of the offsetting mechanism in China’s carbon market includes three parts: 2) the current situation of the global carbon market, 1) an overview of the background of the establishment of 3) emission reduction methodologies in the building sector the Voluntary Emission Reduction market, the trading including those for large and small scale projects under rules and current market development in China, the CDM mechanism and their applications, as well as the development methodology for heating-supply 2) an analysis of the offsetting mechanism in the energy efficiency improvement in existing residential emissions trading pilots in China including the current buildings in northern China and the establishment of development, potential effects on the pilot carbon an international standard for building-sector carbon market and their performances and emissions, 3) an analysis of the issues that need to be considered 4) difficulties and barriers in establishing a baseline for in developing the offsetting mechanism for a unified emissions and the application of methodologies as emissions trading system in China, such as coverage well as an analysis on the barriers in methodology and scope and coordination with other rules in the application and other difficulties and barriers to system and other policies that are related to energy building sector emission reduction activity in the saving and emission reduction in China. carbon market, 5) a summary of relevant laws and regulations, and 6) a further analysis of the prospect of building sector participation in the carbon market and suggestions for some policy recommendations on how to take advantage of the carbon market to promote energy- saving and emission reduction in the building sector. Content 1 CCER Trade (China Certified Emission Reduction) ...........................................................................................................................................1 1.1 Background on the development of the voluntary carbon market ...............................................................................................1 1.2 Rules for CCER trading ........................................................................................................................................................................................1 1.3 The present development situation of the CCER trading system ..................................................................................................5 2 The offset mechanism in seven ETS pilots in China .......................................................................................................................................8 2.1 Impact of the offsetting mechanism for carbon market ....................................................................................................................8 2.2 The present situation of offset mechanisms in 7 ETS pilots in China .......................................................................................8 2.3 Assessment of offsetting mechanisms in China’s emissions trading pilots .........................................................................11 3 Issues to be considered in developing the offsetting mechanism in China’s unified national emissions trading system .................................................................................................................................................................................................................................13 3.1 Restriction of the coverage of the offsetting mechanism ..............................................................................................................13 3.2 The coordination between offsetting mechanisms and other rules in the carbon market ............................................13 3.3 The coordination between the offsetting mechanism and the assessment for the performances of emission control .................................................................................................................................................................................................................................13 3.4 The coordination between offsetting mechanisms and other energy-saving policies .....................................................14 4 Energy consumption and emissions reduction potential in the Chinese building sector .........................................................14 4.1 Current energy consumption ..........................................................................................................................................................................14 4.2 Energy-saving and emission reduction potential in the building sector ................................................................................15 4.3 Building sector in the global carbon market ........................................................................................................................................17 5 Emissions reduction methodologies related to the building sector ....................................................................................................19 5.1 Cases of large scale project methodologies and their application ..........................................................................................19 5.2 Small-scale methodologies and their application cases ...............................................................................................................20 5.3 The determination of baseline emissions ...............................................................................................................................................21 5.4 Issues in and barriers to the application of methodologies .........................................................................................................21 6 The specific methodology and emission standard for buildings ...........................................................................................................22 6.1 Emission reduction methodology of heating energy efficiency retrofits for existing buildings ................................23 6.2 International standard for carbon emissions calculations in buildings .................................................................................23 7 Prospects of building energy-efficiency and emission-reduction projects in the China carbon market ..........................24 7.1 Barrier analysis of building energy-efficiency and emission-reduction projects participating in the carbon market .................................................................................................................................................................................................................................24 7.2 Related Regulations on Energy Conservation and Emissions Reduction in the Building Sector ................................25 7.3 The prospect of building projects participating in the carbon market ...................................................................................26 7.4 Policy suggestions for promoting building energy-efficiency and emission-reduction through the carbon market .................................................................................................................................................................................................................................27 1 1 CCER Trade (China Certified Emission In June 2012, NDRC (National Development and Reform Commission) issued ‘China Certified Emission Reduction Reduction) Trading Management Provisional Regulations’ in order to guide volunteer emission reducing activities in an 1.1 Background on the development of the orderly way, motivate society as a whole to participate voluntary carbon market in carbon reduction
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