23-24 April 2016 – The Chinese Government has made climate protection and the transition to a low-carbon economy a focus; the 13th Five Year Plan (2016-2020) re-emphasized China’s commitment to reducing carbon emissions. Also the National Development and Reform Commission (NDRC) has nominated eight sectors and industries, including cement, to be included in the upcoming national emissions trading scheme (ETS), as a part of the efforts to transition into a low-carbon economy. It is estimated that cement alone is responsible for approximately 15% of China’s carbon emissions and thus holds great potential to aid in curbing them. Additionally, the current market is in a state of production overcapacity as new plants and kilns now can produce a total of 2 billion tonnes per year, which equals roughly 55% of the global capacity. The ETS offers an incentive not only to reduce carbon intensity in the production process, but also to address the overcapacities.
In order to further prepare cement companies to participate in the national ETS, the Sino-German project “Capacity Building for the Establishment of Emissions Trading Schemes (ETS) in China” invited experts and industry representatives from Europe and China to participate in a two-day workshop in Beijing on 23-24 April 2016. The workshop was organized by the GIZ, the China Cement Association (CCA) and the Beijing Association of Cement Industry (BACI).
Topics included industry-specific greenhouse gas (GHG) emissions accounting and reporting, allowance allocation methods, developments in emissions reduction technology and data management. Additionally there were discussions, practical experience sharing sessions and a mock trading exercise. Attendees heard from Ms. Manuela Ojan, a senior-level expert from the European cement industry, who spoke on her experience in monitoring, reporting and verification (MRV), carbon strategy management and efficiency improvements. Ms. Ojan also gave a succinct overview of mitigation options that have been proven effective in the cement industry. Sharing data that clearly showed how reductions can be made, Ms. Ojan demonstrated where managers can perform analysis to find reduction opportunities and how training can have a trickle-down effect to ensure company-wide compliance in a comprehensive format. One Chinese participant stated that, “the advanced case study from the EU, actual carbon trading examples are very practical for my work.”
Mr. Peng Feng of Climate Bridge Ltd. led a hands-on simulation of an ETS model, using their “Carbon Game” software, in which participants were familiarized with carbon trading and asset management. This interactive session gave participants a chance to work together with experts, discuss real-life situations and strategies for asset management over a three-year period. The simulation allocates allowances and assets to various players in an ETS system and guides them through realistic market-based situations. The game puts theory into practise and allowed participants to experiment with different strategies. The game was well-received and participants shared their positive feedback.
The principles of the carbon allowance allocation in cement industry for the national ETS in China were detailed by Dr. Tong Qing of the Institute of Environment and Energy Economics at the Tsinghua University. Additionally the accounting requirements methods and data quality management relating to cement plants were shared by Mr. Hao Qingjun, Senior Engineer of China Building Material Test & Certification Group Co., Ltd.
Data management is a crucial and complex part of a reliable emissions reporting. Ms. Zhao Ying, Deputy General Manager of the Shanghai Treasure Carbon New Energy Environment Protection Technology Co., Ltd. has experience in internal GHG emission data management which she spoke on. Further insight was provided by Mr. Li Tiebing, who serves as the manager of the Business Management Department of the Beijing Cement Plant Co. Ltd. Mr. Li spoke about the administrative responsibilities related to data collection and ETS compliance. Mr Li’s experiences his company’s participation in the Beijing Pilot ETS were well received, one participant added that these examples provided him with a clearer understanding of practical carbon asset management.
Mr. Meng Bingzhan from the SinoCarbon Innovation & Investment Co., Ltd is an approved verifier of the Beijing ETS and CCER verifier. Mr. Meng gave an outline of policies, rules, regulations and the current progress towards the upcoming national ETS.
The workshop provided a platform for participants to discuss the latest regulations of national ETS, mitigation options, best practices from the EU-ETS and Chinese ETS pilot regions that include the cement and explore ways to integrate ETS methodologies into business operations. An engaged and motivated participant base made for a productive collaboration, open discussion and optimistic feedback about the readiness of Chinese cement companies to take up an ETS and begin their own exploration.