Q&A: What is China’s carbon trading scheme?

(EurActiv, 8 Feb 2021) China has launched the world’s biggest carbon trading system to help lower carbon emissions, but critics and analysts have raised doubts about whether it will have a signficant impact.

China is the world’s biggest emitter of the greenhouse gases that drive climate change, and the scheme is part of its efforts to decarbonise its economy by 2060.

Here are a series of questions and answers on key parts of the emissions trading scheme (ETS):

How does it work?

The scheme, which launched on February 1, effectively puts a price on emitting carbon.

It allows provincial governments to – for the first time – set pollution caps for big power companies, and lets firms buy the right to pollute from others with a lower carbon footprint.

However, in its first phase the scheme only covers the electricity sector, involving 2,200 power producers, which is responsible for 30% of China’s total emissions.

Local governments issue a certificate for every metric ton of carbon dioxide or other greenhouse gas equivalent which a company is allowed to emit, and companies pay fines for not complying.

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EurActiv, 8 Feb 2021: Q&A: What is China’s carbon trading scheme?