On 25 September 2019, the Ministry of Ecology and Environment (MEE) issued a notice on national ETS training for the trial calculation of allocating power sector allowances and administrative management. Eight sessions comprising 17 training courses are to be held during the period from 22 October to 8 December for all provinces and regions in China on the topics of national ETS structure, administrative rules for local authorities on allowance allocation, trading management, data reporting, offsetting and so on. The target groups are provincial carbon market authorities, supporting agencies and power generation companies, including Huaeng Corporation, Datang Corporation, Huadian Corporation, China Energy Investment Corporation, State Power Investment Corporation, Guangdong Energy Group, Shenergy Group and Shenzhen Energy Group

Concurrently, the MEE published two versions of the Trial Calculation Plan for Power Generation Sector on Allowance Allocation of National ETS (‘the Plan’) with different benchmarks. Based on the Plan, the MEE requests from local climate change authorities that companies be organised for trial calculation and that results within the respective jurisdictions be submitted to the Department of Climate Change (DCC) of MEE by 6 December. Public comments on the Plan are open until 14 October.

The Plan applies only to power generator units from power generation plants and co-generation of heat and power plants. Allowances will be pre-allocated to companies based on ‘70% of their 2018 production levels × the benchmark factor’. The rest of their licences will be distributed based on their actual 2019 production data. The Plan has two different proposals. The first uses three categories of conventional coal, coal gangue and coal water slurry (including CFBC) and natural gas which set three benchmarks, respectively, of 1.015 tCO2/MWh, 1.120 tCO2/MWh and 0.382 tCO2/MWh (from another version 0.848 tCO2/MWh, 1.002 tCO2/MWh and 0.382 tCO2/MWh). The second proposal splits the conventional coal-fired plants into those with an installed capacity of above or below 300 MW, setting different benchmarks of 0.827 t CO2/MWh and 0.879 tCO2. This proposal also sets benchmarks for heat generation. The calculation of total allowances is derived from adding the electricity production allowance to the heat production allowance. Generally, coal-fired plants are forced to comply, but natural gas plants are not.

The trainings are hosted by the MEE’s Department of Climate Change, organised by the NCSC, co-organised by Tsinghua University, China Electricity Council (CEC), China Quality Certification Center (CQC), China Environmental United Certification Center (CEC), and funded by the EU-China ETS Dialogue project, the Sino-German project on Capacity Building for ETS in China, the Capacity Building Project for the Third National Biennial Update Report on Climate Change, and the World Bank.

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Sino-German Project on Capacity Building for the Establishment of ETS in China

Project country
China
Political Partners
German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU); Ministry of Ecology and Environment of the People's Republic of China (MEE)
Implementation Partners
National Center for Climate Change Strategy and International Cooperation of the People's Republic of China (NCSC)
Duration
07/2012 - 03/2020

The Chinese government has set itself the goal of reaching the peak of CO2 emissions by around 2030 and reducing CO2 emissions per unit of GDP by 60 to 65% compared to 2005 levels. To achieve these targets, China is gradually establishing a national Emission Trading System (ETS) as one of the key building blocks of its mitigation strategy. Since the start of the project in 2012, the Sino-German project “Capacity Building for the Establishment of Emissions Trading Schemes (ETS) in China” has been supporting the Chinese government in this endeavour through knowledge transfer and strengthening of the political leverage of key institutions and stakeholders required to develop and operate an ETS. Initially, the project supported the development of the regional pilots ETS. Since 2016, the focus lies on support for the roll out of the national ETS. The project is jointly implemented by GIZ and the Ministry of Ecology and Environment (MEE) of the People’s Republic of China. It is executed on behalf of the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) within the framework of the International Climate Initiative (IKI) that is financing climate and biodiversity projects in developing and newly industrialising countries, as well as in countries in transition.