China’s climate policies with an emphasis on carbon trading markets

Briefing 10-10-2018

China has emerged as an important actor on the global stage with regards to the United Nations (UN) climate negotiations. China played a vital role in the successful entry-into-force of the Paris Agreement (PA) and has continued to show commitment to its implementation. The country has adopted a range of climate policies in order to fulfil its Nationally Determined Contribution (NDC) commitments by accelerating efforts to both improve levels of energy efficiency and to encourage a shift away from coal energy to low-carbon alternatives. In the UN climate negotiations China continues to advocate that developed countries need to enhance their mitigation efforts and provision of financial support for developing countries. While the carbon and energy intensity targets for 2020, outlined in the 13th Five Year Plan (FYP), appear to be within reach, the recent increase in coal consumption in China has led to concerns regarding the achievement of the 2030 targets. Transforming such a vast economy and its energy system is in any case a long-term task that requires continuous political commitment and a wide range of well functioning policies across different levels and sectors. If the national Emissions Trading Scheme (ETS) is implemented successfully (learning from the experiences of the regional ETS pilots), a strong CO2 price signal (along with market reforms to the power sector) should ensure that CO2 emissions in China peak by 2030.