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China’s carbon neutral goal
ChinaScience

China ETS reduces carbon but needs map to cap-and-trade based system: study

  • Researchers find pilot trading scheme reduced emissions by companies before roll-out of national mechanism
  • They recommend world’s largest carbon market moves to cap-and-trade mechanism if decarbonisation targets are to be achieved

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Just months after the launch of China’s national emissions trading scheme, a new study has found the pilot mechanism worked effectively. Photo: Xinhua
Echo Xie

China’s regional emissions trading scheme (ETS) pilots were effective in reducing companies’ carbon emissions in the early trading phase, despite low carbon prices and infrequent allowance trading, according to Chinese researchers.

The pilots, in seven provinces and cities, started in 2013, ahead of the launch of a national emissions trading scheme – the world’s largest carbon market – in July this year.
China, as the world’s largest emitter of greenhouse gases, hopes the market-based mechanism will help to decarbonise its economy and achieve the climate targets laid out by President Xi Jinping – to reach peak carbon emissions before 2030 and become carbon neutral by 2060 – in September last year.

A study, published on Tuesday in the peer-reviewed journal Proceedings of the National Academy of Sciences, assessed the effectiveness of the regional ETS pilots in Beijing, Tianjin, Shanghai, Chongqing, Shenzhen and the provinces of Hubei and Guangdong.

The study assessed the economic consequences of the ETS pilots based on a unique data set of company tax records in the manufacturing and public utility sectors – including power and heating – from 2009 to 2015.

The researchers compared companies that were regulated in the regional ETS pilots with similar ones that were not, and found the regional schemes were effective in reducing companies’ carbon emissions, resulting in a 16.7 per cent reduction in total emissions and a 9.7 per cent reduction in emissions intensity.

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