The Chinese government has formally announced the launch of its nation-wide emissions trading scheme (ETS) in order to reduce carbon emissions. The countrywide market exchange system is expected to be hosted in Shanghai and the initial open-ended phase will be a test run and no actual obligations will hamper participants. However, other major details such as the effective start of the system and its functioning have been left aside so far.
The system will initially cover the country's power generation sector and in particular power generators with emissions of at least 26,000 tCO2/year. It will be later extended to the rest of the economy, as initial plans spanned eight industries: electricity, chemicals, petrochemicals, construction, steel, non-ferrous metals, paper and aviation. 1,700 companies emitting a total of 3.3 Gt/year of CO2 will be included in the ETS, which will cover around 5 Gt/year of emissions by 2020.
The first mention of a nationwide Chinese cap-and-trade system dates back to September 2015. In the meantime, pilot programs have been introduced in several Chinese cities: Beijing, Shanghai, Tianjin, Chongqing and Shenzhen as well as Hubei, and Guangdong.
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