Increasing the Emissions-Reduction Efficiency of Carbon Trading Schemes in China Under the “30.60” Target: Reflection on the Carbon Markets of Guangdong Province, China

Overview

“30.60”目标下中国碳交易减排效率的提高：基于广东省碳市场实践的思考

作者: 陈绍晴

2022 年 3 月

Key Points:

•    Guangdong currently has two pilot carbon-emissions-trading markets (in Shenzhen — and in Guangzhou, for the remainder of Guangdong Province). The Guangdong—Hong Kong—Macao Greater Bay Area (GBA) carbon market will be established in the near future. Therefore, Guangdong Province has regional advantages in innovation in the low-carbon field.

•    In September 2020, China announced its intention to peak carbon emissions by 2030 and achieve carbon neutrality by 2060. To meet its responsibilities under the “30.60” target, GBA needs to choose a less costly and more efficient way to reduce emissions, build resilience to climate impacts, and promote green economic recovery from the COVID-19 pandemic.

•    In terms of accounting methods, life-cycle accounting from production and consumption perspectives should be the methodological basis for cities, parks, and enterprises to participate in carbon trading.

•    Trading activity in China’s carbon markets needs to be increased. In the future, carbon markets can gradually be opened to small and medium-sized enterprises and individuals, and cross-border trade can also be included in carbon trading mechanisms, with proper risk management.

•    At present, carbon quotas in local pilots and the national market are allocated freely. In the future, a reasonable mix of auctioned allocation and free allocation can be considered to establish a transparent, fair, and dynamic carbon-quota-allocation mechanism.

•    After starting with the electricity industry, the national carbon market will continue to include other key high-carbon industries; China should seek balanced development between local pilots and the national carbon market to improve the efficiency of emission reduction.

The brief builds on discussions in an online research workshop on Guangdong Province’s ETS, conducted June 16 – 17, 2021 by the Harvard Project on Climate Agreements and the Research Center for Climate Change, Guangdong University of Technology, directed by Professor Zeng Xuelan. Information on the workshop, including the agenda, participant list, and most presentations, is here. The Harvard Project’s initiative on Guangdong Province’s ETS is supported by Energy Foundation China.

Chen Shaoqing is Associate Professor, School of Environmental Science and Engineering, Sun Yat-sen University, Guangzhou, China.

Both Chinese and English versions of the brief are included in the document linked below.

The Harvard Project has posted a companion brief by Yang Shu, also a participant in the June 2021 workshop, in mid-March 2022: “The Offsetting Mechanism in Guangdong Province’s ETS: Lessons Learned and the Way Forward.” Yang Shu is Senior Engineer, Deputy Manager of the Green Development Division, and Humboldt Fellow of International Climate Protection at the Guangzhou Branch of the China Quality Certification Centre.  Yang Shu’s brief is available here.