China will bring nearly 10,000 companies emitting around 4 billion tonnes of CO2 per year into its national emissions trading scheme from the start in 2017, a government official said Tuesday, marking a step change from previous plans that would have grown the market to that size only by 2020.
Jiang Zhaoli, deputy director of the climate change department at the NDRC, told a side event at the UN climate talks in Paris that China wanted to cover as many emissions sources as possible to make the scheme efficient.
“We want to enable the market to reveal the [real] price of carbon,” Jiang said.
He said the ETS would cover six sectors and 15 sub-industries from the beginning, contrasting previous statements that 6+2 sectors would be brought in from the start.
Jiang also stressed that the emissions cap for the ETS, which would cover around 45% of China’s national emissions, would be more stringent than the country’s overall emissions target of cutting carbon intensity 40-45% below 2005 levels by 2020 and 60-65% by 2030.
This was to “ensure that there will be transactions,” Jiang said, after showing data revealing a lack of liquidity in China’s seven pilot markets, which he partly attributed to over-allocation.
On the sidelines of the event, Jiang told Carbon Pulse that all the provinces and regions in China would be brought into the ETS from the beginning.
A researcher with a government think-tank involved in designing the national ETS said last week China estimates it needs an average carbon price of 100 yuan ($15.58) to meet its goal of peaking GHG emissions by 2030.
If China carries out the new plan, its national ETS will overtake the EU market as the world’s biggest from the first half of 2017, regulating more than twice as many tonnes of CO2 as the European system.
The step change in ambition is likely to raise questions over China’s ability to launch the market as planned.
President Xi Jinping confirmed in September that the ETS launch would be postponed to 2017 from the initially planned 2016 launch, partly because officials were struggling to put the scheme rules together in time.
Draft regulations were circulated among stakeholders in October, but contained mostly overarching rules, and did not have much detail on allocation and specific trading rules.
An overriding concern with the Chinese market is the quality of emissions data and getting MRV regulations in place.
The NDRC has initiated a major push for all provinces to collect and verify historical emissions data from all major sources. The latest to comply was big-polluting Hebei province, which this week announced it had distributed MRV guidelines for over 20 big industries, and received emission reports from 400 companies, while training over 700 companies in emissions trading.
But concerns linger over the ability to credibly verify emissions data from the thousands of facilities that will participate in the national ETS.
Jiang Zhaoli said 83 entities have been accredited to verify emissions data in the seven pilot carbon markets, but over 80% are small local firms that likely won’t be able to offer their services in the 30 or so provinces and regions that haven’t operated pilot schemes.
By Stian Reklev – email@example.com