Tianjin extends pilot ETS regulations to June 2018

Published 08:02 on March 30, 2016  /  Last updated at 18:30 on March 30, 2016  /  China, China's Pilot Markets  /  No Comments

The Tianjin municipal government has extended the rules of the city’s cap-and-trade programme by two years to 2018 to allow it to continue after this year’s compliance deadline, which originally was meant to be the last for China’s regional pilot markets.

The Tianjin municipal government has extended the rules of the city’s cap-and-trade programme by two years to 2018 to allow it to continue after this year’s compliance deadline, which originally was meant to be the last for China’s regional pilot markets.

In a public notice dated Mar. 21, the Tianjin Municipal People’s Government Office released updated rules for its ETS.

The rules were largely unchanged from the previous version, but importantly it extended by two years to June 30, 2018 the validity of carbon allowances issued under the scheme as well as the market regulations themselves.

The previous regulations were slated to expire in May this year, but the extension was necessary since the launch of the national ETS, originally scheduled for 2016, has been delayed by a year.

All of China’s pilot markets need legal backing to continue to operate for an additional year.

The two-year extension means the Tianjin market would be unaffected in case the national ETS is further delayed.  It also allows the market to continue to operate even after the national ETS launches, although the government has made no indication it plans to do so.

In January, the Beijing municipal government announced its pilot market would carry on after this year without setting an end date. Observers took this as a signal that the Beijing ETS will continue into the future, covering emitters in sectors not regulated by the national market and facilities too small to join the nationwide scheme.

The Tianjin market is among the least liquid of the seven Chinese pilots, with only just over 2 million allowances traded since it launched in Dec. 2013.  This is despite 160 million permits being handed out every year.

Observers have criticised Tianjin for not imposing penalties on emitters that fail to comply, but these rules were left unchanged in the latest iteration.

However, the new regulations were issued by the Tianjin People’s Government rather than the local Development and Reform Commission, which was the case with the previous version. This adds authority to the scheme and makes emitters more likely to comply, according to observers.

By Stian Reklev – stian@carbon-pulse.com

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