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China’s national ETS needs high-level political support to succeed

(China Dialogue, 25 May 2021) Support would drive the cross-ministry coordination needed to ensure the emissions trading system helps China achieve its climate goals.

China’s national emissions trading system (ETS) made a critical breakthrough early this year. While President Xi Jinping’s September 2020 pledge to peak China’s CO2 emissions before 2030 and achieve carbon neutrality before 2060 garnered the world’s attention, it was the long awaited launch of the ETS that really demonstrated concrete action on the ground. The ETS is poised to become a central pillar of China’s climate mitigation strategy. Moving beyond traditional environmental regulation, the ETS has been elevated as a key development priority by China’s leading economic policymakers at the Central Economic Work Conference and at recent sessions of China’s top legislature (National People’s Congress) and political advisory body (Chinese People’s Political Consultative Conference).

However, for the ETS to achieve its potential to play a key role in helping China meet its climate goals quickly and cost-effectively, high-level political support and wide-ranging policy coordination must be deepened as the system begins to operate in earnest.  

With initial coverage over the power sector and initial trades expected in June of this year, China’s Ministry of Ecology and Environment (MEE) has recently strengthened the ETS foundation through three major policy pronouncements. These strengthen monitoring, reporting and verification (MRV), provide an implementation plan and compliance timeline for ETS operations in 2021, and offer draft national ETS regulations, co-drafted with the Ministry of Justice, to govern ETS operations in the longer term.

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China Dialogue, 25 May 2021: China’s national ETS needs high-level political support to succeed