China’s emissions trading scheme lacks bite
Overly generous allowance allocations and low prices blunt impact of world’s largest cap-and-trade scheme in its first 18 months
China’s cap-and-trade scheme has so far struggled to make an impact on emissions from domestic thermal power generators—the only sector it covers—because of low prices and overly generous allowance allocations. China’s emissions trading system (ETS) went live in July 2021 after years of delays and six regional pilots in cities including Beijing and Shanghai. It covers 2,162 thermal power plants that each emit at least 26,000t of CO₂/yr. The scheme, overseen by the state-owned Shanghai Environmental and Energy Exchange (SEEE), covers c.4.5bn t/yr of CO₂ emissions, making it the biggest in the world by volume. But transaction value in its first year of operation reached just RMB8.5bn ($1.22bn)

Also in this section
22 September 2023
A flurry of interest in direct air capture signals a key role for the technology in the push for net zero
21 September 2023
Technology company says its latest technologies can achieve 30–50% cost reductions at the capture stage
20 September 2023
Curbing emissions globally by using international carbon market mechanisms reduces the cost of mitigation, Andrea Bonzanni, international policy director at the IETA, tells Carbon Economist
19 September 2023
Mideast Gulf state keen to highlight progress made on expanding carbon sequestration capacity and diversifying e-fuels production ahead of COP28