Beijing will more than double the participants in its emissions trading scheme by bringing in public transportation and halving the scheme’s threshold to companies that emit 5,000 tonnes of CO2 per year, the municipal government announced Friday.
The market expansion, which will likely cover 2015 emissions, means that around 600 new companies in the capital now face CO2 emission caps, in addition to the roughly 520 firms already covered by the municipal emissions market, sources said.
The newcomers will include public transportation firms as well as smaller companies in sectors already covered by the scheme, such as manufacturers and electricity generators.
For public transport, mobile sources – cars, buses and subway trains – will be required to cut their emissions by 0.5% per year, while buildings and other facilities owned by public transport companies face annual reduction requirements of 4%.
Beijing’s carbon market currently covers just over 50 million tonnes of CO2 per year. No information was made available on how much the new participants emit.
The move means the Beijing ETS will cover more entities than any of the other six pilot carbon markets in China, although Guangdong, Hubei, Shanghai and Tianjin will likely still surpass Beijing in terms of tonnes of CO2 covered.
Beijing follows Shanghai and Guangdong in issuing major changes to its market following the one-year delay of the launch of the national ETS, originally intended for 2016 but now scheduled for 2017.
Beijing CO2 allowances on Friday closed at 37.39 yuan ($5.78), making them the second most expensive units in the pilot markets behind Shenzhen. Beijing’s market is struggling with low liquidity however, with only 26,000 allowances changing hands since Aug. 1.
It remains uncertain how the central Chinese government will manage the transition from regional pilots to a nationwide scheme in 2017.
NDRC officials have indicated that the national market will set an inclusion threshold of 26,000 tonnes of CO2 per year, but have also signalled that all firms participating in the pilots will be brought into the national ETS.
By Stian Reklev – stian@carbon-pulse.com
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