China's nationwide carbon emissions trading system, or ETS, is expected to start trading in July, Premier Li Keqiang said at the State Council's executive meeting on July 7.
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The highly anticipated launch of China's ETS was initially slated for end-June, but was postponed due to undisclosed reasons. The country's carbon market is significant because it could become the world's largest by volume of tradeable carbon allowances when it covers all key sectors under its purview.
Additionally, China's environment ministry and other agencies have been preparing for the launch of the carbon market for several years with multiple test pilots at a regional level, to assess the scope and impact of carbon trading on various businesses and industries.
"Based on experiences from the pilot carbon markets, China will launch its nationwide carbon trading in the power sector in July. We will steadily increase the carbon market coverage with more sectors included in future, so as to control and cut greenhouse gas emissions through a market-based approach," Li told the State Council, according to a televised recording posted on the government's official website.
He did not give any further details.
China started operating 8 pilot carbon markets in Beijing, Chongqing, Fujian, Guangdong, Hubei, Shanghai, Shenzhen, Tianjin in 2013 to gather data and study the mechanisms of carbon trading.
The average carbon price in the test pilots has been around Yuan 25 ($3.9) per ton of CO2, which is significantly lower than the carbon markets in Europe ($64/mt CO2) and California ($22/mt CO2), according to Platts data.
Prior to the official launch, China's environment ministry had developed an action plan of carbon allowance allocation for the power sector in December 2020, and released the managing rules governing registration, trading specifications and settlement in the national carbon market on May 19.