GENEVA, 26 March – A new report released by IETA and CDC Climat Research today finds that China has made significant advances on establishing a national emissions trading system, expected to start next year.

The case study – prepared by IETA and CDC Climat Research and released at Carbon Forum Asia in Macao – finds that China has been taking great strides as it prepares to move from its seven pilot emissions trading programmes to a national carbon market from next year. Drawing upon all recent government decisions as well as official statements, it is the most thorough and authoritative analysis of the Chinese carbon market to date.

The case study takes a close look at the seven pilot programmes and how these are feeding in to the design of the national system, noting that no other country has built an ETS from the bottom-up. It also finds that there are three main challenges as the country makes this transition: double counting of emissions; harmonisation of the seven pilots with the national market; and the passing through of costs to consumers.

“China has moved quickly from implementing its pilot carbon markets to preparing a national market for launch next year,” says IETA President and CEO Dirk Forrister. “The government is building off its experience with the Clean Development Mechanism, showing the continued value of those early investments in international carbon markets, as this case study demonstrates.”

“As efforts for an international climate change deal in Paris intensify, IETA and CDC Climat Research are proud to share this important guide which showcases the efforts China has made on carbon markets,” says Jeff Swartz, IETA’s Director of International Policy.

“China’s pilot emissions trading systems and experience with the CDM have paved the way for greater policies to reduce emissions, and its national carbon market will shape the future for carbon pricing worldwide.”

“China’s choice to start with a period of experimentation of pilots before launching a national emission trading system at a larger scale is unique and offers a bottom-up approach that may be desirable for all new countries wishing to set up an emission trading system,” says Benoît Leguet, Director of CDC Climat Research.

IETA is updating all of its case studies on the world’s carbon markets, with a full release planned for Carbon Expo.