China’s national emissions trading scheme marks the first national effort to price carbon as the world’s largest polluter. The initial design of the scheme shows limited ambition, but it provides a foundation that could be transformational.
The scheme, which started operations in June, will focus on the power sector — steel, cement and aviation were removed from earlier plans. It will provide permits for emissions to over 2,200 companies, based on historic emissions levels and benchmarks on fuel efficiency.
Those covered will need to report emissions and will be able to trade permits with others, with the goal of incentivizing providers to improve the efficiency of power production.
