Exploring China's National Carbon Emissions Trading Scheme

SUMMARY

• The legal framework of the national ETS has a three-level structure; the two ETS exchanges are in Shanghai and Hubei
• The CCER trading center in Beijing and the Guangzhou Futures Exchange in Guangzhou have been established as a supplement to the national ETS
• Market participants and trading products will be limited on the national ETS at the initial stage
• The National ETS will be gradually opened to foreign investors; GBA market and futures market will also bring opportunities to foreign investors

China will launch its national carbon emissions trading scheme (ETS) before the end of July. Building a national carbon market involves a large amount of preparation and challenges are different from those faced by the regional pilot markets. China has a strong will to establish a centralized ETS system, and the national ETS has long been regarded as a key policy instrument to accomplish the country's ambitious pledge for reaching carbon neutrality by 2060.

Under the current legal framework of the national ETS, foreign participants are not covered by the scheme at the initial stage and trading products remain limited.  However, it is expected that China will gradually open its ETS markets to foreign investors in the long term.