(Originally published on 02/23/2016)

Today, the Environomist China Carbon Market Research Report 2016 was launched at the United Nations Development Programme (UNDP) compound.  

Environomist Ltd. is a carbon consulting company experienced in the area of carbon management in China. With contributions from major stakeholders in the development of the country’s carbon markets, such as the International Finance Corporation(World Bank Group), South Pole Carbon Asset Management and UNDP, the Environomist has conducted the third annual market-focused China carbon research on China’s Emission Trading Scheme (ETS).

The report reviews all official documents published in 2015 at both the central and local government level including the NDRC General Office Notice on Earnestly Implementing the Key Works of the National Carbon Emission Trading Market, published on January 22^nd 2016. In addition, a nation-wide market survey has been conducted to collect first-hand data from ETS regulated entities and financial institutions on their level of capacity and expectations for the scheme.

While the EU ETS is still the largest carbon emission controlling policy tool in the world, this year many countries and regions have already started or are preparing to launch ETS within their jurisdictions. China was the first developing country to launch an ETS, with seven regional ETS pilots at the end of 2015, and is expected to become the world’s largest carbon market with the roll-out of the national ETS in 2017.

The report describes lessons learnt to date from China’s experience in implementing the ETS in the seven pilots across China. Richard Mao, Team Leader of Working Group, described the report’s findings and the ETS’s potential to achieve real emissions reduction and to assist stakeholders to better prepare and position themselves in the market. The report captures research findings of current policy landscape and development of Chinese allowance and CCERs trading markets in detail. The results of the report shows that carbon emissions trading in China, while still facing significant challenges, is exceeding performance expectations. The pilots have achieved 95% compliance rates, there is growing interest and attention from non-pilot areas, and capacity for businesses to engage in ETS is increasing.

Hannah Ryder, Head of Policy and Partnerships at UNDP China said “China has shown real leadership in taking steps to put a price on carbon by using cap and trade. Since their establishment and implementation in 7 pilot areas in 2014, China has already become the second largest carbon trading market in the world, following the European Union.”

Following the report launch was a commentary discussion with a panel of experts from UNDP, IFC, South Pole, and Carbon Star Group.

(N.B. Hannah Ryder was Head of Policy and Partnerships from August 2014- July 2016)