EDF Applauds China’s Launch of Market-Based System to Cut Climate Pollution

China announced that it would begin phasing in an ambitious new program to stabilize and eventually reduce carbon pollution, a program that will become the world’s largest emissions trading system (ETS). China anticipates the carbon trading program, in which emissions credits below a defined limit are bought and sold on a market, will be a key tool to meet its greenhouse gas emissions pledge under the Paris climate agreement.The initial phase of the ETS will cover the power sector, and is expected to include 3.5 billion metric tons of carbon emissions from some 1,700 stationary sources; this represents roughly 39% of the nation’s total emissions, and is dramatically larger than the current largest program, the European Union’s ETS. Additional sectors such as cement and aluminum will be phased in over the coming years, and by the time China’s program is fully implemented in 2020, it is expected to cover some 5 billion metric tons of CO2. Similar carbon trading programs in the European Union and California have effectively reduced emissions while encouraging economic growth. This market-based approach is being used by 50 countries, states and provinces around the world to drive down climate pollution and help support greater long-term ambition.

“The world has never before seen a climate program on this scale,” said Environmental Defense Fund (EDF) President Fred Krupp. “It is important that the world’s largest emitter should lead on climate, and that is precisely what China is doing by launching its national emissions trading system. China has stepped up its climate leadership dramatically in recent years, and is now increasingly seen as filling the leadership void left by the U.S.

“This new carbon market will position China not only to achieve its Paris Agreement pledge to peak carbon emissions by around 2030, but to take on a more ambitious target that puts China’s emissions on a downward trajectory well before then. Chinese leaders have drawn lessons from the experience of other countries, and they’re moving in a gradual and sure-footed way to make sure they get this right. I think that’s smart. And I’m proud that EDF has been able to provide technical assistance to the Chinese government on areas such as system design, data quality, third-party verification, compliance and enforcement,” Krupp said.

EDF has been working in China for more than 25 years, helping to gradually build the capacity and ambition needed for an undertaking of this magnitude. In recent years, EDF trained more than 39,000 Chinese environmental enforcement officers, and provided technical assistance as China launched seven regional and municipal carbon trading pilot programs. Their success inspired Beijing to move ahead with the program announced today.

“I would like to express my highest regards to Environmental Defense Fund (EDF) for its actively promoting the exchange and cooperation between China and the U.S. on environmental protection and providing rigorous support to many activities,” Minister Li Ganjie of China’s Ministry of Environmental Protection told EDF in a letter earlier this year.

Background

Environmental Defense Fund (EDF), the first registered international non-governmental organization under the Ministry of Environmental Protection in China, has been working for more than two decades to help build China’s capacity and ambition to address climate change.

Beijing called on EDF in the early 1990s to help guide the country’s first pilot projects using economic incentives to reduce pollution. In recent years, we provided technical assistance as China launched seven carbon trading pilot programs. Their success inspired Beijing to announce that it would begin phasing in a national emissions trading system.

EDF has provided technical support to the Chinese government on critical preconditions to realizing China’s ambitions for the ETS including system design, data quality, third-party verification, training, and enforcement. EDF staff will continue to provide expertise in execution, refinement and measurement of the program’s success.

EDF’s pioneering work is a result of 50 years of environmental stewardship with public and private sectors in the United States and around the world. EDF has extensive experience in the development of emissions trading systems, including the U.S. acid rain cap-and-trade program, the 1997 Kyoto Protocol, Europe’s emissions trading system, and California’s cap-and-trade program, and also works with jurisdictions including Mexico on potential new emissions trading systems.