Carb on Market Business Brief
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CARBON MARKET BUSINESS BRIEF CHINA CHINA’S PILOT SYSTEMS AT A GLANCE Beijing Shanghai Shenzhen Guangdong Hubei Chongqing Tianjin Fujian Years in operation Since November Since November Since June 2013 Since December Since April 2014 Since June 2014 Since December Since September 2013 2013 2013 2013 2016 Overall cap & Around 50 million The 2019 cap was Excluding buildings, Around 465 million Around 270 million Around 97 million Around 160–170 Around 220 million trajectory tCO2e in 20181. 158 million tCO2e the cap was around tCO2e in 2019 and tCO2e in 2019 tCO2e in 2018 million tCO2e in in 2019 31.45 million tCO2e 2020 2017 in 2015 Target(s) 20.5% reduction in Carbon intensity 45% reduction in 20.5% reduction in 19.5% reduction in 19.5% reduction 20.5% reduction in 19.5% reduction carbon intensity, reduction of 20.5%, carbon intensity carbon intensity, carbon intensity by in carbon intensity carbon intensity, in carbon intensity compared to compared to 2015 compared to 2005 compared to 2015 2020, compared to compared to 2015 compared to 2015 compared to 2015 2015,and pledge by 2020 and to by 2020. The city by 2020, and 2015 levels by 2020 by 2020 and pledge by 2020 to peak its GHG peak emissions by has also pledged to pledge to peak to peak its CO2 emissions both by 2025 peak its emissions emissions before emissions by 2025 2020 by 2022 2030 ¹ It is estimated to be around this value also in 2018 and 2019, but exact number is not available. Updated May 2021 Beijing Shanghai Shenzhen Guangdong Hubei Chongqing Tianjin Fujian Sectors covered • Electricity • Airports • Power • Power • Power • Power • Heat and • Electricity providers • Domestic • Water • Iron and steel • Industry • Iron electricity • Petrochemicals • Heating Sector Aviation • Gas • Cement • Steel and production • Chemicals • Cement • Ports • Manufacturing • Paper non-ferrous • Iron and steel • Building • Petrochemicals • Shipping Buildings • Petrochemicals metals • Petrochemicals materials • Other industrial • Chemicals • Port, subway, • Aviation • Chemicals • Chemicals • Iron and steel enterprises • Heat and power public buses • Cement • Oil and gas • Nonferrous • Manufacturers • Water suppliers and other • Caustic soda • Paper, aviation, metals • Service sector • Hotels non-transport and building • Paper • Public transport • Iron, steel and sectors. materials are • Domestic aviation non-ferrous • Aviation metals included from • Ceramics • Petrochemicals 2019 • Building materials • Paper • Railways • Rubber • Textiles • Large commercial shops GHGs covered CO2 CO2 CO2 CO2 CO2 CO2, CH4, N2O, CO2 CO2 HFCs, PFCs, SF₆ # of covered 831, as of 2019. A 280 existing and 33 706 as of 2020 245 existing plus 23 373 as of 2020 180 as of 2019 113 in 2019 269 in 2019 and entities further 14 aviation new entrant entities new entrant entities 2020 entities and 634 in 2020 in 2020 other entities have mandatory reporting but no surrender obligations. Allocation method Mix of free allocation and auction (except Chongqing, where units are freely allocated) 2 Carbon Market Business Brief: China Beijing Shanghai Shenzhen Guangdong Hubei Chongqing Tianjin Fujian Trading rules Public online Public online Trading is via fixed Public online Public online Public online Trading is either Entrustment bidding and bidding and price transactions, bidding and bidding (±10% limit bidding and OTC via online spot trading, exchange agreement transfer agreement transfe electronic bidding agreement on the daily price) trades. Compliance deals or OTC trades, fixed price (OTC, exceed (OTC, exceed (±10% limit on the transfer (OTC, and agreement entities, trades. Compliance transfers, and 10,000 tonnes per 100,000 tonnes daily price) and exceed 100,000 transfer (OTC). international or entities, OTC deals. Only deal). Compliance per deal). Only bulk entrusted tonnes per deal). Compliance domestic brokers international or local compliance entities, China compliance entities transaction (in Local compliance entities, and individuals are domestic brokers entities and Chinese domestic investors and domestic excess of 10,000 enterprises, international or eligible to trade. and individuals are domestic investors and individuals are investors can trade. tonnes per deal, international or domestic brokers eligible to trade. can participate. eligible to trade. ±30% limit on domestic brokers, and individuals are the daily price). funds, trusts and eligible to trade. Trading is open to individuals are compliance entities, eligible to trade international and domestic investors and individuals. Use of offsets and Domestic CCERs CCERs generated CCERs can be CCERs are allowed. CCERs can be CCERs from 2010 CCERs are allowed CCERs from linking are allowed, up to after 1 Jan 2013 used for 10% of the Credits from a used for 10% of onwards are for up to 10% of projects in the 5% of the annual can be used for 3% annual compliance provincial offset the annual initial allowed up to 8% the compliance province and allocation. Of these, of the cap. (2020 obligation. programme, Pu Hui allocation for each of the compliance obligation. They Fujian Forestry 50% must be from Shanghai Allowance Hydropower project Certified Emission entity. Only credits obligation, except can only be from Certified Emissions Allocation Plan credits are not Beijing projects. Reductions from rural biogas for those from projects which Reductions accepted, and there Only CCERs from (PHCERs), have or forestry projects hydropower target CO2 (FFCERs) are are geographic renewable energy, restrictions on the been accepted in the key counties projects. reductions, except allowed. The use energy conservation use of others. since 2017. At under the national hydropower, and of CCER credits is projects and least half of all or provincial must be of vintage capped at 5% of the forestry carbon offsets used must poverty alleviation 2013 or later. annual compliance sink projects are come from projects plan (within Hubei) obligation, whereas allowed. targeting CO2 or are eligible, and there is a cap of methane emissions, must have been 10% for use of and at least 70% generated between both credit types. must come from 1 January 2013 and Hydropower credits projects located 31 December 2015. are not eligible. in the province. Credits from hydropower and most fossi fuel projects are not eligible. 3 Beijing Shanghai Shenzhen Guangdong Hubei Chongqing Tianjin Fujian Trading rules Public online Public online Trading is via fixed Public online Public online Public online Trading is either Entrustment bidding and bidding and price transactions, bidding and bidding (±10% limit bidding and OTC via online spot trading, exchange agreement transfer agreement transfe electronic bidding agreement on the daily price) trades. Compliance deals or OTC trades, fixed price (OTC, exceed (OTC, exceed (±10% limit on the transfer (OTC, and agreement entities, trades. Compliance transfers, and 10,000 tonnes per 100,000 tonnes daily price) and exceed 100,000 transfer (OTC). international or entities, OTC deals. Only deal). Compliance per deal). Only bulk entrusted tonnes per deal). Compliance domestic brokers international or local compliance entities, China compliance entities transaction (in Local compliance entities, and individuals are domestic brokers entities and Chinese domestic investors and domestic excess of 10,000 enterprises, international or eligible to trade. and individuals are domestic investors and individuals are investors can trade. tonnes per deal, international or domestic brokers eligible to trade. can participate. eligible to trade. ±30% limit on domestic brokers, and individuals are the daily price). funds, trusts and eligible to trade. Trading is open to individuals are compliance entities, eligible to trade international and domestic investors and individuals. Use of offsets and Domestic CCERs CCERs generated CCERs can be CCERs are allowed. CCERs can be CCERs from 2010 CCERs are allowed CCERs from linking are allowed, up to after 1 Jan 2013 used for 10% of the Credits from a used for 10% of onwards are for up to 10% of projects in the 5% of the annual can be used for 3% annual compliance provincial offset the annual initial allowed up to 8% the compliance province and allocation. Of these, of the cap. (2020 obligation. programme, Pu Hui allocation for each of the compliance obligation. They Fujian Forestry 50% must be from Shanghai Allowance Hydropower project Certified Emission entity. Only credits obligation, except can only be from Certified Emissions Allocation Plan credits are not Beijing projects. Reductions from rural biogas for those from projects which Reductions accepted, and there Only CCERs from (PHCERs), have or forestry projects hydropower target CO2 (FFCERs) are are geographic renewable energy, restrictions on the been accepted in the key counties projects. reductions, except allowed. The use energy conservation use of others. since 2017. At under the national hydropower, and of CCER credits is projects and least half of all or provincial must be of vintage capped at 5% of the forestry carbon offsets used must poverty alleviation 2013 or later. annual compliance sink projects are come from projects plan (within Hubei) obligation, whereas allowed. targeting CO2 or are eligible, and there is a cap of methane emissions, must have been 10% for use of and at least 70% generated between both credit types. must come from 1 January 2013 and Hydropower credits projects located 31 December 2015. are not eligible. in the province. Credits from hydropower and most fossi