Climate Cooperation China
On behalf of the International Climate Initiative (IKI)
Project activities

Sino-German Cooperation on Emissions Trading Systems, Carbon Market Mechanisms, and Industry-related N2O Mitigation

China has set itself the goal of peaking CO2 emissions before 2030 and achieving carbon neutrality by 2060. The national emissions trading system (ETS) is expected to play a central role in achieving this goal. In 2021, the Chinese ETS entered its first compliance phase, in which it will regulate CO2 emissions from around 2,200 companies in the power generation sector. As laid out in the 14th Five-Year Plan and the 2035 long-term outline, China is further committed to strengthening the control of non-CO2 greenhouse gases (GHG), such as N2O and HFCs, which are particularly potent GHG. GIZ on behalf of the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety of the Federal Republic of Germany (BMU) has been supporting the development of an ETS in China since 2012. Since the launch of the national ETS, the project provides support to further refine the ETS. A particular focus lies on supporting the enhancement of the monitoring, reporting and verification (MRV) system and strengthening the political and technical dialogue between China and Germany on carbon market topics. Since 2020, the project has also been supporting the abatement of industry related N2O emissions through capacity building, studies, workshops, and various exchange formats.
DURATION
10 years
07/2012
09/2022
ComMissioned by
BMWK+IKI_FZ_Web_en

What we work on

ETS and Carbon Market Mechanisms

ETS and Carbon Market Mechanisms

  • Promote ETS policy dialogue between China and Germany
  • Support national ETS implementation and refinement (e.g., trainings, research, study tours)
  • Promote exchange on ETS implementation between Chinese and German industry
  • Support China in sharing ETS experience with other Asian countries
Industry-related N2O mitigation

Industry-related N2O mitigation

  • Support of measures of implementation to sustainably reduce N2O emissions
  • Exchange of German experience in industrial N2O abatement
  • Capacity building and policy recommendations

What we have achieved

  • Supported the establishment of the ETS pilots in China
  • Trained more than 5,000 people from environmental administration and companies on national ETS
  • Organized wide-ranging exchange on the technical design of the national ETS in cooperation with the German Emissions Trading Authority (DEHSt), the European Energy Exchange (EEX) and International Carbon Action Partnership (ICAP)

Featured video

This video by the German Emissions Trading Authority (DEHSt) at the German Environment Agency (Umweltbundesamt) explains how the ETS works in practice.

ETS in practice: A short introduction

Climate change can be felt already. The consequences of global warming include ever new heat records, heavy rains, and floods.

In order to protect the climate by reducing GHG emissions, the European Union introduced an ETS in 2005. The ETS is a market mechanism that creates incentives for companies to burn less coal and gas and thus reduce their climate-damaging emissions by setting a cap for emissions and providing tradable allowances.

Since 2013, China has introduced pilot ETS in Beijing, Shanghai, Tianjin, Chongqing, and Shenzhen, as well as in Guangdong, Hubei and Fujian province. China’s national ETS will become the largest system in the world.

This video by the German Emissions Trading Authority (DEHSt) at the German Environment Agency (Umweltbundesamt) explains how the ETS works in practice.

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Climate Cooperation China
On behalf of the International Climate Initiative (IKI)