China's National Carbon Market One Year On - A Model for Developing Countries?

Michal Kurtyka, the President of COP24, at last put on a smile when the final agreement was adopted at the COP24 UN climate change conference. After 15 days of negotiations, the "rulebook" of the Paris Agreement was finally adopted by all parties. 

Kurtyka, who is also the State Secretary of Poland's Ministry of Energy, said China played a fundamental role in the climate negotiations. In the latter part of the negotiations, China relingushed its past position of pushing for a clear division of responsibilities for rich and poor countries and agreed to follow "uniform" climate change rules.

While progress was made on key areas for the implementation of the Paris Agreement, especially the requirement for greater transparency in emission disclosures, there was still a lack of consensus over other trickier issues.

The main sticking point was Article 6, the so-called “market mechanisms” which allow countries to meet a part of their domestic mitigation goals. Brazil, which has a large forest area, wanted to keep the carbon credits it amassed under an old system and tried to introduce new language to the text which developed countries argued lack transparency and would allow for “double counting” of emissions cuts. Since no agreement was reached, this issue was shelved until the next climate talks in Chile.

During the climate change conference, the Chinese delegation held a total of 25 side events at the China Pavilion, including one on China's national carbon market. Xie Zhenhua, China’s Climate Change Special Representative, delivered an opening speech at the national carbon market event, which saw a huge turnout by representatives of international and Chinese organizations. The crowd filled the aisles and entrances to the Pavilion, indicating the widespread interest in China's national carbon market development.

It has been nearly a year since China launched its national carbon trading market. Having spent seven years prior to the launch preparing and piloting the system (in seven provinces initially and one more pilot was added later on), how does China's carbon market compare to the development of carbon markets globally? What progress has been made after one year of implementation at the national level? Where are the priorities of the next phase? The Energy Observer sought answers to these questions from several carbon trading and energy experts on the side of COP24.

The world's largest carbon trading market

According to Fatih Birol, the Executive Director of the International Energy Agency (IEA), China's carbon market is the largest in the world, both in terms of its trading volume and scale, and its development and results can serve as a model for other develping countries.

Li Gao, Director of the Department of Climate Change in China's Ministry of Ecology and Environment (MEE) who was also the Deputy Head of the China delegation, explained that in the first year, the development of China's national carbon market mainly covered five areas, namely the establishment of the trading mechanism, basic infrastructure building, verification of emission data, capacity building and introducing carbon trading to the power sector. Currently the Department is focussing on the verification of emissions data from 2016 and 2017, and has established a national emission database. 

Li Gao, Director of the Department of Climate Change in China's Ministry of Ecology and Environment, spoke at the China Pavilion at COP24 on the prorities of China's national carbon market. (Photo by Yixuan Cai)

Emission reduction is main priority

In terms of the allocation of emission quotas, although China has not formally announced the national plan, according to insider sources, the state has already determined a set of allocation principles. At the same time, China is piloting the use of baseline emission data to allocate emission quotas, which is considered to be a more equitable approach compared to other methods of allocation. The national carbon market will therefore also adopt the same approach.

Although carbon traders are most concerned about carbon price, Zhang Xiliang, Director of Institute of Energy, Environment and Economy at Tsinghua University, who also participated in the design of China’s natonal carbon market, said that setting targets for emission reduction is China's top priority in its Emission Trading Scheme (ETS). Carbon price, on the other hand, would be determined by market forces.

Zhang said, "In fact the price of carbon is linked to the choice of the emission baseline. If we set a strict baseline and allocate tight emission quotas accordingly, we would be able to achieve the goal of emission reduction, and at the same time generate a reasonable carbon price."

He further pointed out that based on the analysis by Tsinghua University, with the combined effects of China's renewable energy policy, natural gas subsidy policy and carbon market on emission reduction, the carbon price may not necessarily be as high as expected.

Nevertheless, drawing from the EU (European Union) ETS and its carbon price trends, China's carbon price will likely continue to rise and Beijing's current carbon price (40-50 RMB per ton) could be used as a floor price in the future.

Comparing with California's carbon market design

Nathaniel Keohane, Senior Vice President of the Environmental Defense Fund agreed with Zhang that emission reduction should be the main priority of carbon markets. He  drew comparison between China and California's carbon markets. 

He said, unlike China's baseline emission approach, California adopted an output-based allocation (OBA) approach, for the reason that for power-intensive industries and other industries that are highly vulnerable to trade shocks, their energy costs account for a large share of the overall production costs, and free emission quotas using OBA would help them mitigate the risks and impacts of trade shocks. This approach provides emission credits based on economic outputs rather than emission levels, so in other words, it provides a subsidy for these industries.

Another strength of the California model, according to Keohane, is that it combines OBA with a consignment auction approach, which allows the market to work out the price and value of carbon. Under a normal auction, electricity suppliers would tend to pass on emission costs to the consumers by raising the price of electricity. On the other hand, free emission quotas may not effectively communicate price signals to consumers. The consignment auction, therefore, strikes a good balance between the two. It generated a large number of auctions in the early stages of California’s carbon market and protected consumers' interests while effectively reduced emissions. California model, Keohane said, could serve as a good template for China's carbon market design. At the same time, he stressed the importance of reassessing the carbon trading design regularly to ensure that it is working effectively to reduce emissions.

Importance of information gathering and communication

Liu Shuang, Director of the Low Carbon Project at the Energy Foundation, emphasized the importance of capturing data and information from the carbon market and establishing an open channel that facilitates information exchange among the stakeholders. The effectiveness of the design and operations of the carbon market should be assessed based on the information and feedback, and changes should be made accordingly. By sharing information, carbon traders would also receive medium and long-term price signals and be motivated to adopt emission reduction technologies and approaches.

Yixuan Cai reported from COP24 in Katowice, Poland, with the support of the 2018 Climate Change Media Partnership, a collaboration between Internews' Earth Journalism Network and the Stanley Foundation.

Below is the full report in Chinese. 

COP24速递 | 中国碳市场周岁，碳价预期如何？

eo记者 蔡译萱 发自波兰卡托维兹

波兰当地时间12月15日深夜，COP24大会主席波兰能源部副部长Michał Kurtyka终于微笑着敲锤宣布，各国代表达成协议，大会正式闭幕。

这场原定于上周五结束的大会，延续了以往“拖堂”的传统，历经15天，最终《巴黎协定》的规则手册获得所有缔约方通过，大会也公布了规则手册的完整汇编。Kurtyka指出，中国在本次气候变化谈判上发挥了重要的建设性作用。在谈判后期，中国同意放弃长期坚持的发展中国家与发达国家分别采用两套报告体系，改为全球统一的体系。

虽然此次谈判取得了一定的成果，各国承诺将依循更强透明度的规则来披露其排放量，但是对一些关键细节仍有争议。

这一次没谈妥的细节包括 《巴黎协定》第六条规则的碳市场谈判（carbon market negotiation），即如何利用碳市场限制二氧化碳排放，为全球制定统一的碳市场规则。争议主要围绕在碳市场交易的机制。拥有大片热带雨林的巴西希望沿用在旧制度下累积的碳排放额度，但已开发国家代表却不赞成。他们认为旧制度缺乏透明度，这个做法疑会重复计算碳排放额。谈判各方为此未能达成协议，最终决定把碳排放交易细则推至明年即将在智利举行的COP25讨论。

气候谈判期间，中国代表团在会场内的“中国角”举行了第八次的碳市场边会。中国气候变化特别代表解振华在会议第二周首日上午便来到碳市场边会发表开幕演讲，两旁过道和入口处站满了来自国际国内组织和研究机构的观众，各方对中国碳市场的关注可见一斑。

距离全国碳排放权交易市场启动已接近一年。历经近七年的筹备时间和"7+1"地试点，中国碳市场在全球碳市场中处于怎样的发展阶段和水平？ 启动一年后，碳市场的进展究竟如何?下一阶段发展重点又在何处? 国际机构专业人士有哪些建言？在联合国气候大会的第二周，多方业内人士向记者展开分析。

中国碳市场的全球定位

世界银行最新的碳定价报显示，到2018年，已有51个国家和地区实施或即将启动碳定价政策，覆盖全球20%的温室气体排放量。给碳定价以及碳市场等政策是这些国家和地区采用的重要减排措施。

自2011年起，中国先后在七个省市（后加入福建）启动了地方碳交易试点工作。解振华表示，截至今年10月，试点地区的碳排放配额成交量达2.64亿吨二氧化碳当量，交易额约60亿元人民币。他指出，中国7000多家企业的排放量就占到全国排放量的75%，对它们实行能耗和碳强度目标的双控，再把3000家重点企业纳入碳市场，中国的排放基本就能控制了。

国际能源署署长比罗尔指出，在去年他同解振华的会面中， 除交流经验外，双方还签署了构建全国碳市场的谅解备忘录。中国碳市场就体量和交易规模而言，是世界上最大的碳市场，其建设成果可以成为其他发展中国家的模板。

启动一年，全国碳市场建设进展如何？

自2017年12月19日开始，国家发改委印发《全国碳排放权交易市场建设方案(发电行业)》，全国碳市场正式启动。初步确立了“基础建设期、模拟运行期和深化完善期”三步骤的行动方案，截至目前仍处于基础建设阶段。

据生态环境部气候司司长李高介绍，过去一年全国碳市场建设的进展主要在制度体系建设、基础设施建设、重点排放单位历史排放数据的核查、能力建设以及在发电行业启动碳交易工作这五个方面，未来将继续加快推进这几方面的工作。目前国家正在重点核查2016和2017年的行业数据，并已建立了全国数据报送系统，但还要进一步优化，以及研究组建机构。

对于先行纳入的发电行业，李高指出将发挥行业协会的作用，开展相关工作，制定教材、研究方案和技术指南等。从地方试点到全国碳市场的过渡，他表示关键在于鼓励地方主动发挥作用推动相关能力建设，积极组织相关测试。此外，他再次明确了碳市场作为政策工具的定位，表示将以发电行业为突破口逐步扩大范围以及交易品种与主体，防止过度金融化，并加快把自愿减排量纳入碳市场。

碳市场配额如何分？基准线如何定？

除制度以及能力建设外，对于碳市场的各方参与者来说，最受关注的莫过于配额分配。虽然全国方案暂未出台，但eo记者从业内人士了解到，国家已经确定了适当从紧的碳配额原则，同时，现在试点普遍采用基准线分配法，其相比现有其他分配方式更为合理，因此全国碳市场也将采用基准线进行分配。

当配额分配主要依靠行业的基准线，也就是说，配额适当从紧，基准线也要相应收紧。据清华大学能源环境经济研究所所长张希良介绍，适度从紧的概念意味着最起码现有的行业碳排放与基准情境下碳排放的情况（BAU，Business As Usual）相比要有绝对的下降，基准线也相应比较严 。

作为一种相对指标，BAU实施减排的基准可以随时间而变化，其基准是在基准情景下同一年的排放量，并允许国家考虑未来经济社会发展的不确定性，为保证发展所需的排放增长留出空间。从欧盟碳市场（ETS）的运行实践和经验来看，BAU与配额都是一同成为决定排放权供需的重要因素。

张希良表示，全国碳市场在设定基准线时主要考虑两个因素，一个是行业减排的需要，其次要使碳排放交易体系能够实现碳强度下降，达到国家规定的约束性指标，或者长期要实现的《巴黎协定》承诺以及提前达峰等目标。

“每个行业都要减排，减排目标也各不相同，国家十三五规划有一些目标性的说法，而行业基准线会比目标还要严一些”，张希良向eo记者解释道。

同时，以基准线做为分配时需要有良好的行业数据基础，他指出，过去几年已经有报告和企业实际的报送数据，全国有7500多家企业至少有三年的数据（2013-2015年）是非常完整的。

张希良说：“这些数据对基准线的选择非常重要。现在国家正在组织核查2016-2017的数据，加上这部分会更完善。之所以从发电行业开始，除了该行业是碳排放大户，此外也是因为发电行业数据基础也比较好”。

未来碳价预估及走势？

不过对于很多碳市场从业者而言，更关心的可能是碳价。张希良分析说，中国ETS（Emission Trading Scheme）首先是设定减排的目标，更关注减排，碳价则由市场决定。“如果我们将来设定基准线比较严，按照适度从紧的分配，就能实现减排的目的，也能有一个合理的碳价，碳价实际上和基准线的选择也有关系”，他表示。

他进一步指出，按照清华曾做的模型分析，如果考虑到可再生能源政策、天然气补贴政策以及碳市场，那么目前北京的碳价（40-50元/吨）将可能作为未来碳价的底价（floor price）参考。 但是，对中国来说最重要的还是确保减排，加之中国不仅有碳价政策，还有可再生能源和其他清洁能源补贴等政策，因此碳市场最终不一定会有很高的价格。不过，参考欧盟的机制及走势，预计中国将来碳价的走势依旧会不断上升。

欧盟ETS经过十几年的发展，并几易其机制，将原来发放过多的配额消化了之后才出现现在（20欧/吨）的碳价。

国际组织眼中的中国碳市场与经验

对于中国启动一年的碳市场，美国环境保卫基金（Environmental Defense Fund）高级副主席Nathaniel Keohane对比了美国加州碳市场的经验。他认为碳市场的重点应该放在减排，而使其保持活跃并繁荣发展则要在分配方式上努力。加州采用了基于产出的分配法（Output based allocation approach），这是由于能源密集型和易受到贸易冲击的行业中能源成本在整体生产成本中占比重很大，为缓解贸易冲击担忧而首选的免费分配方法就是基于产出的免费分配（OBA）。它根据经济产出而不是排放水平来提供碳配额。实际上是为企业提供了一种补贴，基于产出的免费分配是在基于历史排放水平免费分配方法的一大改进。免费分配会导致一些价格扭曲，但由于企业还有出售剩余配额的动机，不会从根本上削弱配额价格。

同时加州碳市场还有一个优点，就是在OBA之外还配合委托拍卖配额（consignment auction）的方式，在市场进行价值和价格发现。相比单纯的配额拍卖，电力供应商会以更高的价格向电力消费者转嫁成本，而免费配额则未必能很好地向消费者传递价格信号；委托拍卖很好地平衡了单纯拍卖和免费分配的解决方案，它在碳市场运行的初期产生大量的拍卖，并且在有效保护消费者利益的同时减少了更多的排放量，这对于中国碳市场设计是一个好的模板。

此外Keohane指出，碳市场的机制需要持续性的重新审视，依据实际情况不断做出调整。加州碳市场已运行了八年，去年监管者鉴于碳市场运行顺利并有助实现气候目标，因此对接下来十年延续这个机制更具信心。

能源基金会低碳项目主任刘爽则表示，在关注国家碳市场建设进展快慢的同时，也要关注正式上线后如何及时捕捉碳市场运行的数据和信息，对碳市场的设计和运行进行评估，并建立一个公开的机制，在与利益相关方充分交流的基础上，进行碳市场的改革。这种机制将可以更好地让市场参与者建立信息，通过预先释放中长期价格信号，倒逼企业尽快采取减排技术和手段。

对于多数电力企业关心的如何将碳市场与电力市场有机联动，张希良指出，电改更复杂，中国现在设计的碳市场机制，是根据在现有的电力体制下，怎样去完善系统来考虑；将来电力体制改革到位了，碳市场实施的效果会更好，并且对以后配额分配采取拍卖机制提供帮助。他认为，当前电力体制改革和碳市场还是应该分开考虑，等电力市场建设好再建碳市场就太晚了。

目前欧洲碳市场和其现货市场经历了十多年的运行后，已经产生了较好的协同效应。碳价高起时，发电企业会选择关停煤电机组，启用碳排放相对较少的气电机组。对此，张希良分析道，“届时，碳市场设置了基准线，高排放的企业相当于增加了碳税，相比煤电机组，天然气含碳量低，其发电的成本就相应降低，也会有更多燃气机组运行。” 

本报道得到“2018年气候变化媒体伙伴”项目的支持。此项目由Internews 地球新闻网络（Earth Journalism Network）与Stanley基金会联合主办。