China aims to start national emissions trading by June

China plans to kick off trading in its first national emissions-trading scheme (ETS) by the end of June, the ecology and environment ministry (MEE) said.

"The construction of the national ETS has come to the most critical stage", MEE minister Huang Runqiu said today. He urged officials involved in the ETS to accelerate testing to ensure the trading system could start running before the end of June.

The national ETS is one of the "core policy tools" to implement China's goals to peak emissions by 2030 and achieve carbon neutrality by 2060, Huang said.

The regulations for the ETS took effect on 1 February. All entities that emitted more than 26,000t of CO2 equivalent (CO2e) in any single year from 2013-19 will be included.

The national ETS centre will be located in Shanghai while the registration system will be in Wuhan, Hubei province. China already operates emissions-trading programmes on a pilot basis in seven cities and provinces. These programmes typically cover eight emissions-intensive industrial sectors — power plants, cement and construction materials, steel, petrochemical, chemical, non-ferrous metal, paper and aviation.

The pilot programmes will initially transfer 5pc of quotas into the national ETS, in the hope that trading volumes will hit 2mn t, Lai Xiaoming, chairman of the Shanghai Environment and Energy Exchange said in January.

"We expect that the eight key emission industries will be included in the national carbon market, and total emissions quotas will reach 5bn t in the 14th five-year-plan period" that runs from 2021-25, Lai said. "China will be the largest carbon emission market in the world", he said. The Shanghai exchange operates one of the ETS pilot projects and is heavily involved in work on the national scheme.

The ETS, which will include all greenhouse gas emissions measured by CO2e, will initially apply mainly to power plants this year. MEE has published guidelines on how emission quotas will be distributed to a total of 2,225 coal- and gas-fired power plants, including manufacturing facilities that have captive power plants. They will receive free carbon emissions quotas covering 70pc the electricity and heat produced in 2018, with actual quotas to be allocated by provincial governments after final adjustments based on actual production levels in 2019-20.

Several refineries are covered, including state-controlled Sinopec's 320,000 b/d Shanghai, 470,000 b/d Maoming Petrochemical and 280,000 b/d Yangzi plants, state-run PetroChina's 200,000 b/d Wepec and 180,000 b/d Jinzhou Petrochemical, state-owned Sinochem's 114,000 b/d Hongrun Petrochemical and the 400,000 b/d private-sector Hengli Petrochemical.

Hengli Petrochemical operates eight 50MW coal-fired power units for its refinery at Changxing in Dalian. The emissions benchmark for single coal-fired units with capacity below 300MW is 0.979 t of CO2/MWh, according to MEE's guidance.

The Shanghai, Yangzi and Maoming refineries have coal-fired capacity of 424MW, 360MW and 200MW respectively.

Ten steelmakers are included in the list, including Baotou Steel, Anshan Steel and Pangang.