Markets 20:05, 17-Jul-2021

CGTN Explains: Understanding China's national carbon emissions trading market

Updated 11:38, 18-Jul-2021
Wang Tianyu , Zeng Hongen

After running pilot projects at the local level for over a decade, China officially launched its long-awaited national
carbon emissions trading market on Friday.
According to China's Ministry of 1)_____________ and 2)_____________ (MEE)[中华人民共和国生态环境部],
China's Emissions Trading Scheme (ETS) has replaced the EU's as the world's largest emissions trading system.
Here's everything you need to know about China's carbon market.
What is a carbon market?
A carbon market is where greenhouse gas emitters can buy and sell greenhouse gas emissions 3)_____________ or
4)_____________.
The government sets the 5)_____________ on the total amount of carbon emissions for the year, then companies
receive or buy emissions quotas within the 5)_____________. A company must provide enough allowances to cover
all its emissions yearly or face a 6)_____________. They can trade carbon emission allowances with one another on
the trading platform.
In China's ETS, the majority of the allowances are given to emitters for 7)_____________; however, in most of the
other carbon markets, they are purchased.
Also, China's version targets 8)_____________ rather than capping emissions.
In the EU and U.S. versions, an overall cap is set on the number of carbon credits. This is the amount of carbon the
signatories of the agreement are happy to emit over a given period. China's scheme will set benchmarks for each
separate power plant, which will vary between facilities. As before, those that do not exceed their quota can sell it to
those that do.
Who's involved?
In the first phase, the system only covers the 9)_____________ sector. Over 2,000 power companies, emitting more
than 4 billion tonnes of greenhouse gases per year or 10)_____________ percent of the country's yearly total, have
participated.
According to MEE, seven more high 11)_____________-intensive industries, including iron and steel and
construction materials, will be covered by the carbon market in the future.
Why build a carbon market?
The country is trying to use the trading scheme to reduce greenhouse gas emissions, as part of its effort to
12)_______________________________ by 2030 and 13)____________________________________ by 2060.
"For the first time, the responsibility for controlling greenhouse gas emissions at the national level is left to the
enterprises," said an earlier statement released by the MEE.
What's the price?
Carbon pricing is a crucial component in deciding how effectively the carbon market can help reduce carbon
emissions.
The first deal in China's ETS was sealed at 52.78 yuan ($8.16) per tonne, with a total of 160,000 tonnes of emissions
worth 7.9 million yuan traded while the average carbon price on the European Union ETS between 2021-2025 is
47.25 euros ($55.67) a tonne, according to a survey by the International Emissions Trading Association.