Assessment of the performance of pilot carbon emissions trading systems in China

As China’s national carbon emissions trading system (ETS) is counting down to establishment, experience and lessons from pilot ETSs are of great value, which come from assessment of the implementation effectiveness, especially how the covered entities are affected. To understand how well the pilot ETSs have operated and how entities behave, the research conducted two questionnaire surveys among covered entities in the pilot ETSs in 2015 and 2018. The surveys investigate how strictly rules have been enforced for monitoring, reporting and verification (MRV) and compliance. Inquiries are also made about the pressure imposed by ETSs and the abatement actions that covered entities have taken in consequence. The results show that (1) while compliance procedures and measures have become routine, further improvement is required regarding enforcement of MRV rules in certain pilots; (2) the free allowance allocation methods tend to be tightened though the allocation results at present are much likely to be “approximately balanced”; (3) almost all of the entities surveyed have developed emission abatement strategies with a significant improvement compared to the survey in 2015, but nearly half of the entities have no explicit emission reduction targets along with limited perception of marginal abatement costs; and (4) compliance remains the dominant driver for entities to participate in emissions trading, while strategies are emerging to gain profits from emissions trading by enhancing carbon asset management capacity.