A set of interim rules for carbon emissions trading management in China came into effect on Monday, marking a key step in the establishment of a unified national emissions trading system (ETS) amid the country's all-out efforts to meet its 2060 carbon-neutral target.
A total of 2,225 power firms across the country, assigned with carbon dioxide emission caps, can trade their emission quotas via the system whereby firms that exceed their caps can purchase unused quotas from those with low emissions.
It is the first time China has specified the responsibilities of enterprises to cut greenhouse gas emissions, which will help boost green development and tackle climate change, according to Li Gao, head of the department for addressing climate change under the Ministry of Ecology and Environment.
Li said that stable carbon trading among power firms will pave the way for the gradual expansion of the national ETS to include more industries, trading varieties and trading modes, thus promoting the system's healthy and sustainable development.
China has announced that it will strive to bring its carbon emissions to a peak before 2030 and become carbon neutral before 2060.
In an effort to build a national ETS, the country has been piloting emissions trading at the regional level since 2011, covering seven provinces and cities including Beijing, Shanghai, and Guangdong.
The pilot programs have driven major emitters to significantly reduce their emissions over the years.
At the China Emissions Exchange (Guangzhou), the country's largest local carbon market-based in the southern Guangdong Province, carbon emissions of listed enterprises in the power generation, cement, steel, and petrochemical sectors dropped by 12.3 percent from 2013 to 2019.
About 250 major carbon emitters in Guangdong are listed on the exchange. They account for nearly 70 percent of energy-related carbon emissions in the province, a manufacturing powerhouse.
Data from the exchange shows that the carbon intensity, or carbon emissions per unit of GDP, of listed enterprises in the secondary industry, shrank by 21.6 percent from 2013 to 2019.
Zhang Chen, deputy director of the exchange's carbon market department, said emissions trading has helped Guangdong phase out its backward production capacity and achieve its emission reduction target.
Chai Qimin, who heads the strategic planning department of the National Center for Climate Change Strategy and International Cooperation, said the construction of a national emissions trading system can connect the various local markets in the country, enhancing market liquidity and reducing trading costs for enterprises.
NEW ENERGY, LOWER EMISSIONS
In a bid to achieve its ambitious carbon-neutral target, China is striving to slash its carbon emissions by replacing fossil fuels with renewable energy.
The country has vowed to increase the share of non-fossil fuels in primary energy consumption to around 25 percent by 2030, and bring its total installed capacity of wind and solar power to more than 1.2 billion kilowatts (kW).
In north China's Inner Mongolia Autonomous Region, a major coal-producing area, a total of 36 wind power plants with a combined installed capacity of nearly 7 million kW were connected to the power grid in early January in the region's latest effort to curb its carbon emissions.
The total installed capacity of renewable energy in Inner Mongolia has reached 50 million kW, providing about one-fifth of total electricity consumption in the region, according to data from the regional energy bureau.
Electricity generated here will also be transmitted to China's more developed eastern region, contributing to nationwide emission reduction efforts.
Inner Mongolia is the epitome of China's nationwide drive to allow renewable energy to play a greater role in its energy structure. Official data shows that as of December last year, China's total installed capacity of wind power has reached 229 million kW, while solar cells across the country have reached a combined installed capacity of 228 million kW.
In the consumption end, Shanghai has pledged to lower the proportion of coal in its primary energy consumption to around 30 percent by 2025, and add about 200,000 public charging piles for new energy vehicles, according to a government work report released at the annual session of the local people's congress in January.
The megacity aims to bring its carbon emissions to a peak before 2025, five years ahead of the national target.
MORE CARBON SINKS
In addition to curbing carbon emissions, China is also afforesting its land and restoring wetlands to create more carbon sinks.
Carbon sinks are reservoirs such as forests, lakes, and oceans that absorb and store carbon dioxide from the atmosphere.
China saw its forest coverage rate rise from 21.66 percent in 2015 to 23.04 percent in 2020. Its forest carbon reserve has hit 9.2 billion tonnes, an average annual increase of over 200 million tonnes in the past five years, which is equivalent to a carbon sink of 700 million to 800 million tonnes, according to the National Forestry and Grassland Administration.
The administration has vowed to increase the country's forest coverage rate to 24.1 percent by 2025 and raise the country's forest stock volume by 1.4 billion cubic meters to reach 19 billion cubic meters in the next five years.
In Inner Mongolia, an important ecological barrier in north China, an average of 600,000 hectares of land have been afforested annually over the past five years, raising the region's forest coverage rate to its current 22.1 percent.
Local forestry authorities in the region's Greater Hinggan Mountains forest area have been piloting a carbon sink trading project since 2014, allowing companies that surpass their emission caps to purchase carbon sinks in the area to offset extra emissions.
To date, the transaction volume of carbon sink trading in the area totals nearly 2 million yuan (about 311,200 US dollars), according to official data.
"The revenue from carbon sink trading has been used to improve local ecological protection efforts, thus achieving a balance between economic development and environmental protection," said Song Yongli, a local forestry official.
