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Daiqing Zhao · Wenjun Wang
Zhigang Luo
A Brief Overview of China’s ETS Pilots Deconstruction and Assessment of Guangdong’s Greenhouse Gas Emission Trading Mechanism
ABriefOverviewofChina’sETSPilots DaiqingZhao • WenjunWang ZhigangLuo
ABriefOverviewofChina’s ETSPilots DeconstructionandAssessment ofGuangdong’sGreenhouseGas
EmissionTradingMechanism
DaiqingZhao
GuangzhouInstituteofEnergyConversion ChineseAcademyofSciences Guangzhou,Guangdong,China
WenjunWang
GuangzhouInstituteofEnergyConversion ChineseAcademyofSciences Guangzhou,Guangdong,China
ZhigangLuo
GuangzhouInstituteofEnergyConversion ChineseAcademyofSciences Guangzhou,Guangdong,China
ISBN978-981-13-1887-0ISBN978-981-13-1888-7(eBook) https://doi.org/10.1007/978-981-13-1888-7
JointlypublishedwithChinaEnvironmentPublishingGroupCo.,Ltd.,Beijing,China
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© ChinaEnvironmentPublishingGroupCo.,Ltd.andSpringerNatureSingaporePteLtd.2019
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Foreword CarbonEmissionsTradingPlayingaKeyRoleinChina’sEcological Construction
GuangdongPilotETSOfferingExperiencesforaNationwideCarbon Market
Ecologicalconstructionisastrategicchoicethattallieswiththeworlddevelopmenttrends,whileagreenandlow-carbondevelopmentpattern acorecontent andtoppriorityofecologicalconstruction hasbecomeacenterpiecethatconcerns theworldsustainabledevelopment.Sincetheanthropogenicglobalwarminghas beenintensivelythreateningtheworldecologicalsecurityandhumansurvival,the differentpartsoftheworldhavereachedconsensustotakeconcertedactionsto handletheissueofclimatechange.Inordertosustainsocioeconomicprosperity whileresolvingtheclimaticchallenge,allnationsshallturntoalow-carbonand eco-friendlydevelopmentpatternthatharmonizestherelationshipbetweenmankindandnature,andultimatelytransformsthehumansocietyfromanindustrial civilizationtoanecologicalcivilization.Undersuchcircumstance,the environmental-bearingcapacityseemstobecomeanincreasinglyscarceresource, meaningthatenvironmentalcapacitywillbecomeanindispensableproduction factorlikelaborforce,capital,andland.IntermsofthecarbonEmissionsTrading Scheme(ETS),itisaregimethattreatsemissionsallowancesasascarcesourceand aproductionfactorandexhibitstheirvaluebysalesprices.Overall,theforgingof carbonmarketisanessentialpartforChina’secologicalconstruction,because administrationandtransactionofemissionsallowanceswillintroducerevolutionary changeupontheenergysystem,promotethetransitionofthesocialproductionand consumptionpatterns,andfacilitatesthepopularizationofagreenandlow-carbon socioeconomicgrowthpattern.
Afterthe ParisAgreement waspassedin2015,allconcernednations,including China,werebearinganarduoustasktocopewiththepressingclimaticissue.Being anationofwordsanddeeds,Chinahasmadegreatcontributionsinmitigatingthe globalwarming.From2005to2017,ChinahadlowereditsCO2 intensityofGDP by45%,realizinginadvancethereductiontargetof40–45%in2020compared with2005thatChinapledgedattheCopenhagenClimateConferencein2009. With
the ParisAgreement,Chinastatedtocutits2030CO2 intensityofGDPby60–65% fromthe2005level,indicatinganannualaveragedecreaseatabove4%,outpacing theaveragedropat2%amongthedevelopednationsover2005–2014.Moreover, ChinawillmakeeffortstoculminateitsCO2 emissionsaround2030,andduring thisperiod,theannualdropinCO2 intensityofGDPneedstoreach4–5%forthe annualGDPgrowthratewouldbe4–5%.Inordertoperformtheobligations includedinthe ParisAgreement,Chinashallworkevenhardertomakemore contributions,whichcallsforasystematicbackupfrombothinstitutionsand policies.Therefore,Chinashall,ononehand,letthegovernmentplayaleading role,holdontothelong-termlow-carbondevelopmentstrategy,carryoutthe near-termlow-carbondevelopmentplan,insertrestrictiveemissionsindicatorsinto boththeprovincialandnational5-yearplans,improvethe fi scaland financial policies,constantlystrengthenlow-carbontechnicalnormsandraiseindustryentry threshold.Ontheotherhand,Chinashallgivefullplaytotheroleofcarbonmarket inachievingenergysavingandemissionsreduction.Bycombiningwithdiverse policyinstruments,Chinawillbeabletocreateanall-winlandscapewherethere willbeprosperouseconomy,improvedenvironment,secureenergysupply,andless CO2 emissions.
Boththe18thNationalCongressoftheCommunistPartyofChina(CPC)and theThirdPlenarySessionofthe18thCentralCommitteeoftheCPCexplicitly statedtoforgeaheadwiththeecologicalcivilizationconstruction,letmarketplaya decisiveroleinresourceallocation,andactivelycarryoutthepilotprogramabout carbonemissionstrading.Chinashall,throughmarketizationandinterest-driven mechanism,motivateindividuals,enterprises,andgovernmentstogivetheirsubjectiveinitiativeintofullplay,activelyseekforlow-carbondevelopment,andalter theoldgrowthpatternthatoverlyreliesongovernmentplansanddirectives,soas tocreateasituationwhereallcitizenstakepartinsavingenergyandcutting emissions.InOctober2011,theNationalDevelopmentandReformCommission (NDRC)releasedthe NoticeonCarryingouttheWorkabouttheCarbonEmissions TradingPilotPrograminChina (NDRCClimateChangeDept[2011]No.2601), whichdesignatessevenChineseprovincesandmunicipalities(incl.Guangdong Province)totaketheleadincarryingouttheETSpilotprogram.Guangdongcarbon market,whichisthelargestoneamongthesevenpilotcarbonmarkets,wasofficiallylaunchedon19December2013.Throughconstantexplorationsandinnovations,andbasedonsteadyprogress,anopen,transparent,well-organized,and efficientlyoperatedGuangdongcarbonmarkethasbasicallytakenshapetotake chargeforadministrationandtradingofemissionsallowances.Duringthe12th Five-Yearplanperiod(2011–2015),GuangdonghadcuttheCO2 intensityofGDP by23.9%,exceedingthenationallyrestrictivetargetat19.5%.BytheendofMay 2017,Guangdongcarbonmarkethadtradedaround58.10milliontonsofemissions allowances,holding35.4%ofthetotalofthe7markets;earningtotalrevenueat around1.42billion(bln)yuan,accountingfor36.9%.Thus,Guangdongcarbon marketwasthe firstoneofthistypeinChinathatbrokethebenchmarkvalueat1 blnyuan.
GuangdongisafairlydevelopedprovinceinChina,itischaracterizedby imbalancedregionaleconomicgrowth,arduoustaskforcuttingemissions,completevarietyofindustrialsectorsanddiversi fiedemitters,whichimplythat GuangdongETSdesignandoperatingexperiencesareworthofimitationand promotion,evenitsinstitutionallayoutandadministrativeaccountabilitymay inspirethebuildingofanationalcarbonmarket.Inaword,anall-roundanalysis ofthesevenpilotcarbonmarkets,particularlyGuangdong,willbeoffar-reaching signifi canceforChina’semissionsreductionundertaking.Atthetime,whenthe pilotcarbonmarketsareabouttodockwiththeunifiednationalcarbonmarket, GuangzhouInstituteofEnergyConversion(GIEC) subsidiarytoChinese AcademyofSciences(CAS) deliberatelyreviewsandevaluatesGuangdongETS, decomposestheregimeintoseveralfactorsforrevealingtheirdesigns,andfor introducingthesupportingpoliciesbehindthedesigningprocess.Filledwithrich content,detailedcasesandcompletedata,thisbookisabletotransmitthe ETS-relatedknowledgetotheinstitutions,organizations,governmentoffi cials, researchers,orcorporatemanagersthatareinterestedincarbontrading,orusedasa textbookfortrainingthetalentsinChinacarbonmarket.
Beijing,China July2018
HeJiankun
ViceChairmanofChina’sNational ExpertPanelonClimateChange, FormerExecutiveVicePresidentof TsinghuaUniversity
Preface AddressingClimatechangeistoday’scommonchallengeinfrontofthemankind. Injoiningtheglobalendeavorinmitigatingclimaterisks,Chinahelpedconcluding andenforcingtheParisAgreement,anddelivereditsIntendedNationally DeterminedContributions(INDCs)totheUNFCCC1 Secretariatin2015,committingtoformanationalunifiedcarbonEmissionsTradingScheme(ETS)steadily basedonthepilotsETSprograms,whichisacrucialstepinfulfillingitsINDCs targets.
ChinalaunchedtheprogramofpilotETSmechanism 2 in2011,markingan officialstartofthenation’scarbonmarketconstructioncampaign.Guangdong Province oneofthetwopilotprovinces openeditscarbonmarketin2013.To date,ithasful filledthreecomplianceperiodswith100%ofcomplianceratefor2 yearsinarow,realizingsmoothmarketperformanceandremarkableemissions cutbacks.Asof2016end,Guangdongspotcarbonmarkethastraded47.35million tons(Mt)ofemissionsallowances,earningtotalturnoverof1261million (mln)yuan,thusrisingtoChina’slargestandtheworldthirdlargestcarbonmarket. Morethan70%ofGuangdong-basedcoveredenterprisesloweredcarbonintensity,3 markingaprominentcontributioninoverfulfi llingGuangdong’semissionsreductiontarget,andinadvancingindustrytransformationandupgradingduringthe12th Five-Year-Planperiod(2011–2015).BeingChina’s firstoperatedpilotcarbon marketattheprovinciallevel,Guangdonghasmadeseveralpioneeringexplorations byincorporatingitscharacteristics,e.g.,settingupatotalallowancesadministration systemundertheemissionsreductiontarget;managingtheallowancestocovered enterprisesandnewentrantsinaseparatemanner;emissionsfromcoveredenterprisesareunderhierarchic(provincial/municipallevel)administration;andintegratingfreeallowancesallocationwithpaidallocation.Asa “pacesetter,foregoer
1 UnitedNationsFrameworkConventiononClimateChange.
2 InOctober2011,theNationalDevelopmentandReformCommission(NDRC)releasedthe NoticeonCarryingouttheWorkofCarbonEmissionsTradingPilotPrograminChina (No.2601 [2011]).
3 “Carbonintensity” referstocarbondioxideemissionsperunitofGDP.
andtester,” GuangdongETSfullyexhibitsthecharacteristicsofaprovincialETSin bothframeworkandadministrationhierarchy.
Inlightofitscarbonmarketconstructionagenda,aChina-wideemissions tradingschemeisabouttobelaunchedin2017.However,unlikethesevenpilot carbonmarkets,mostofChina’sprovincesandcitieshavelittleexperienceinthis regard.Theyshallat firstresolveseveralurgentquestionsbeforemakingsuchan attempt.Forexample,whataretheinterrelationsbetweenallelementsunderthe ETS?WhataretheforemostquestionsundertheframeworkofnationwideETS? HowtoassesstheETSmechanismdesign?GuangzhouInstituteofEnergy Conversion,ChineseAcademyofSciences(GIEC,CAS) isaleadingthinktank forbuildingGuangdongETS,sponsoredbyGuangdongETSPilotProgramof ChinaCleanDevelopmentMechanismFund(CDMFUND),GuangdongETS ImpactAssessmentofUKStrategicProsperityFund(SPF),andSpecialFundsfor Low-carbonDevelopmentofGuangdongProvince.UndertheguidanceandelaborateorganizationoftheNDRCandGuangdongProvincialDevelopmentand ReformCommission(GDDRC),GIECjoinedintheformationofGuangdongETS attheoutset.ItisdeeplyimpressedthattheETSdesignisafairlypracticaland systematicproject.Itinvolvesmultiplelinksasformingamanagementframework, definingcoveredenterprises,establishingemissionsreductiontargetsandcarbon offsetrules,settingacapontotalallowances,determiningallowancesallocation methodologies,puttinginplaceofaregistrationsystem,andguardingagainst marketrisks.Eachlinkisseparatebutcloselyinteracted.Therefore,ascienti fic analysisandassessmentofeachlinkandtheireffectisindispensablebeforeanETS isofficiallylaunched.
ThisbookisanoutgrowthofthejointeffortsofGIEC’sEnergyStrategy ResearchCenterandNon-carbonEnergyResearchCenter.Inthisbook,theauthors sharetheirthoroughunderstandingofGuangdongETS,exchangeswithotherpilot areasandnewthoughtsthatwereinspiredbytheirpeers.Theybreakdownthe entireGuangdongETSpilotprogram,dissectthemacropoliciesintotheideasfor designingeachlink,andunfoldthetheoreticalresearchprocessbehind policy-making.Suchanin-depthanalysiswillenlightenotherprovinces/citiesthat areinterestedinETS,andpromotesmoothconstructionofanationaluniform carbonmarket.WeherebysendourgratitudetoGDDRC’sDepartmentof AddressingClimateChangefortheirtrustandsupport.Ourthanksalsogotoother researchinstitutionsthathavebeenworkingwithusinbuildingGuangdongETS.
Guangzhou,ChinaDaiqingZhao December2016
5.4.2ApproachforCalculatingTotalQuantity
6.2ForeignandChineseAllowanceAllocationApproaches
6.4GuangdongETSAllowanceAllocation
6.4.1InterpretationofGuangdongETSAllowance
6.4.2AllowanceAllocationMethodology
6.4.3AllocationCorrection
6.5CrucialElementsofGuangdongPilotETSAllowance
6.5.2RediscussiononResponsibilityDivision forEmissionsReduction
6.5.3ProblemsinDe finingBenchmarkValue
6.5.4MattersNeedingAttentionWhenDe
6.5.5AllowancesCorrection
7.2CurrentEmissionsMeteringandMonitoringinGuangdong
7.3CompilationoftheGuidelinesforReportingofCO2 Emissions
7.3.1CompilingPrinciples
7.3.2BasicFrameworkoftheGuidline
7.4Veri ficationRulesandQuality
7.4.1Veri fi
7.4.2RequirementsforVerifi
7.4.4ImprovementofVerificationQuality
7.5DissectionofKeyIssuesandSuggestions
7.5.1KeyIssuesinDevelopingthe Guidelines
7.5.2KeyIssuesinEmissionsVeri
8DevelopmentTrackandPolicyContextofGuangdong CarbonMarket
8.1CarbonMarketElements
8.1.1TradingActors
8.1.2TradingProducts
8.2AllowancesAllocationandTransactioninPrimaryMarket
8.2.1LogicBehindMarketRegulation
8.2.2TransactionsinPrimaryMarket
8.3TransactionsinSecondaryMarket
8.3.1Overview
8.3.2MarketMobility
8.4MarketOutlookandSuggestions
9.1AssessmentofETSOperationalEf
9.1.1ModelBuilding
9.1.2Input
9.1.3Input
9.1.4ModelSolving
9.1.5OutcomeofModelEvaluation
9.1.6AnalysisandSuggestions
9.2ImpactofAllowanceAllocationonCompanies
9.2.1ComparativeAnalysisofCompanies
9.2.2ImpactonIRRofGeneratingUnits
9.2.3CriticalThresholdofElectricityCompanies forBearingEmission-ReductionCost
10ImpactofGuangdongETSonMacroeconomy
10.1Macro-evaluationofCarbonTradingPolicies
10.2RationaleofModeling,Objectives,andMethodologies ofCarbonTradingPolicyEvaluation
10.3EvaluationResultofGuangdongETSonEconomy
10.3.1SettingBasicParameters
10.3.2SettingScenarios
10.3.3AnalysisofSimulationResults
10.4EvaluationConclusionsandSuggestionsBased
AbouttheAuthors DaiqingZhao researchdirectorandseniorresearcherofGIEC.Shegraduatedfrom TohokuUniversitywithadoctoraldegreeinEngineering.Sheisamemberofthe CAS “100TalentsProgram”,chiefscientistofthe “973Program”,expertmemberof GuangdongGovernmentDecision-makingAdvisoryCommission,environmental advisoroftheStandingCommitteeofGuangdongProvincialPeople’sCongress, DeputyDirectorofCombustionInstituteofChineseSocietyofEngineering Thermophysics,andpart-timedoctoralsupervisorofUniversityofScienceand TechnologyofChinaandNanjingUniversityofAeronauticsandAstronautics.
WenjunWang DoctorofEconomicsandseniorresearcherofGIEC.
ZhigangLuo MBAandseniorengineerofGIEC.
XiaolingQi DoctorofEngineeringandseniorresearcherofGIEC.
PengWang DoctorofEngineeringandseniorresearcherofGIEC.
YuejunLuo MasterofScienceandassistantresearcherofGIEC.
PengchengXie MasterofManagementandengineerofGIEC.
SongyanRen MasterofEngineeringandassistantresearcherofGIEC.
ChubinLin DoctorofEngineeringandmemberofPostdoctoralResearchCenter ofChinaMerchantsGroup.
LeWang DoctoralstudentofCAS.
GuohuiGao MasterofEconomicsandformerresearcherofPolicyStudiesGroup ofChina(Guangzhou)EmissionsExchange.
Abbreviations BAUBusinessasUsual
BCRCBeijingClimateChangeResearchCenter
BPBritishPetroleum
CARClimateActionReserve
CARBCaliforniaAirResourcesBoard
CASChineseAcademyofSciences
CCERChineseCertifiedEmissionReduction
CCRCostContainmentReserve
CCSCarbonCaptureandStorage
CDMFUNDChinaCleanDevelopmentMechanismFund
CEEXChina(Shenzhen)EmissionExchange
CERCerti ficationEmissionsReduction
CGEComputableGeneralEquilibrium
CNPCChinaNationalPetroleumCorporation
CPCCommunistPartyofChina
CPIConsumerPriceIndex
CRPowerChinaResourcesPowerHoldingsCo.,Ltd.
CSETChineseSocietyofEngineeringThermophysics
DEADataEnvelopmentAnalysis
DIDDifference-in-Differences
DMUDecisionMakingUnit
EEIEnergyEfficiencyIndex
EFEnergyFoundation
EISElectronicInformationSystem
ETSEmissionsTradingScheme
EUETSEuropeanUnionEmissionsTradingScheme
GDLCPAGuangdongLow-CarbonEconomyPromotionAssociation
GDDRCGuangdongProvincialDevelopmentandReformCommission
GHGGreenhousegases
GIECGuangzhouInstituteofEnergyConversion
GOFGlobalOpportunitiesFund
ICAPInternationalCarbonActionPartnership
IETAInternationalEmissionTradingAssociation
IOUInvestorOwnedUtilities
IPTSInstituteforProspectiveTechnologicalStudies
IRRInternalRateofReturn
J-VERJapanVerifiedEmissionsReduction
KETSKoreaEmissionsTradingScheme
KNNk-NearestNeighbor
KVAPKeidanrenVoluntaryEmissionsActionPlan
LSELondonSchoolofEconomicsandPoliticalScience
MGGRAMidwesternGreenhouseGasReductionAccord
MRVMonitoring,ReportingandVerification
NAPNationalAllocationPlan
NAPCCTheNationalActionPlanonClimateChange
NDRCNationalDevelopmentandReformCommission
NZETSNewZealandEmissionsTradingScheme
OTNObligationTransferNumbers
PATPerform,AchieveandTrade
POLESProspectiveOutlookonLong-TermEnergySystems
POUPubliclyOwnedUtilities
PPSProductionPossibilitySet
PRIMESPartialEquilibriumModel
RECRenewableEnergyCerti ficate
REDDReducingEmissionsfromDeforestationandForestDegradation
RGGIRegionalGreenhouseGasInitiative
ROIReturnonInvestment
SAMSocialAccountingMatrix
SICStandardIndustrialClassi fication
SPFStrategicProsperityFund
TFPTotalFactorProductivity
UNFCCCUnitedNationsFrameworkConventiononClimateChange
VERVoluntaryEmissionReduction
WCIWesternClimateActionInitiative
Abstract DeconstructionandAssessmentofGuangdongPilotEmissionsTradingScheme isa richfruitofresearchers’ 5-yeareffortsindocumentcompilation,surveysand studies,dataanalysis,consultationsanddiscussions,andpracticalworkincarrying outthepilotprogram.Itcoversallcrucialfactorsthatshallbeconsideredfor forminganETS,ideasfordesigningeachlink,potentialproblemsanddifficultiesas wellassolutions.Inaddition,thisbookoffersaquantitativeassessmentof GuangdongETSfromitsoperationaleffi ciency,macro-andmicro-influences,and drawssomeconclusionsandinspirationsthatwillbenefittheformationofa nationwideETS.SomerelevantpoliciesaboutGuangdongETSareattachedinthe appendixforreaders ’ reference.
Thisbookconsistsoffourparts:PartIintroducestheglobalexperiencesin constructingcarbonmarket,andanalyzesthecharacteristicsofGuangdongenergy consumptionandcarbonemissions,inanaimtoclarifythebackgroundforinitiatingETSintheprovince.PartIIelaboratesontheformationandoperationof GuangdongETSandinterpretsthecrucialelementsduringthepilotperiod(2011–2015),e.g.,definingcoveredenterprises,calculatingtotalallowances,developing allocationplans,designingtheMRV4 regime,andevaluatingcarbonmarketperformance.InPartIII,theauthorsuseICAP/CGE-GDandDEAmodels5 toassess themacro-andmicro-impactofGuangdongETS,and findoutthatitlowers emissionsreductioncostremarkably,butnotefficientenough.Moreover,wealso noticedthatallelementsinvolvedintheETSarecloselyinterrelated,implyingthat whenjudgingtheinputofanelementisappropriateornot,weshouldtakeaccount oftheinputofotherelements,insteadofacross-wisecomparisonofthissingle elementorhaveitnormalized.Thereisalsoananalysisofthefactorsthataffectthe ETSadministrationefficiency,includingtheregulatedemissionsquantity,total
4 MRV:Monitoring,Reporting,andVeri fication.
5 ICAP:InternationalCarbonActionPartnership;CGE:ComputableGeneralEquilibrium;DEA: DataEnvelopmentAnalysis.
amountofallowances,companies’ profitability,andpotentialsinemissionscutbacks.PartIV(appendix)introducesthekeypoliciesthatareunleashedwhile GuangdongETSpilotprogramisimplemented.Theyarelistedinachronological orderforreaders’ convenience.
Chapter1 Introduction 1.1Introduction Inlightofthedirectivesofthe18thNationalCongressoftheCommunistPartyof China(CPC)andtheThirdPlenarySessionofthe18thCentralCommitteeofthe CPC,Chinashallvigorouslypressaheadwiththeconstructionofecologicalcivilization,letmarketplayadecisiveroleinresourceallocation,andactivelycarryout thepilotprogramforthecarbonemissionstradingscheme(ETS).In2011,the NationalDevelopmentandReformCommission(NDRC)releasedthe Noticeon CarryingouttheWorkofCarbonEmissionsTradingPilotPrograminChina (No.2601[2011]),whichdesignatessevenmunicipalities/provinces1 tobuildan ETSthataccordswithChina’sspecialsituations.Aftermorethan2years’ of preparation,GuangdongETSofficiallycameonlineonDecember19,2013,and becamethe fi rstonethathadrunthroughtheentireoperationalprocessbyJuly15, 2014,includingcompanies’ emissionsreporting,veri fication,allowancesallocation andauction,andcompanies’ compliance.AsofDecember1,2015,China (Guangzhou)EmissionsExchange anallowancesbiddingplatform hadtraded about23.20Mtofallowance accountingforabout35.7%ofthetotaltrading volumeofallpilotareas;anditsaccumulatedrevenueof960mlnyuanheldabout 43.3%ofthetotalrevenueofallpilotareas,highlightingitspositionasthelargest carbonmarketinChina.
Guangdongcarbonmarkethasbeensofaroperatingsmoothly.Localcompanies havelearnedmoreabouttheETSandacceptedthisnewenvironmentgovernance mechanism.Thecoveredenterprisesarefairlyobservant,over80%ofthemhave achievedemissionscutbacks.GuangdongETShasmadeseveralnewbreakthroughs,e.g.,byfollowingtheprincipleofopennessandtransparency,itisthe fi rst onethatmadepublicthetargetsforsettingacapontotalallowances;theaggregate allowancestradingvolumeandrevenueontheprimaryandsecondarycarbon
1ThesevenpilotareasaremadeupoftheprovincesofGuangdongandHubei,andthemunicipalitiesofBeijing,Tianjin,Shanghai,Chongqing,andShenzhen.
© ChinaEnvironmentPublishingGroupCo.,Ltd.andSpringerNature SingaporePteLtd.2019
D.Zhaoetal., ABriefOverviewofChina’sETSPilots, https://doi.org/10.1007/978-981-13-1888-7_1
marketsrankthe firstplaceamongallpilotareas;theentireprovincehasbecome highlyawareoftheimportanceofemissionsreduction;andmoreandmorelabor forcehas flockedintothelow-carbonservicesector.Besides,Guangdongtookthe leadinexercisingallowancesauction,drawingnewentrantsintoemissionsregulation,creatingacarbonfundwiththeallowancestradingrevenue,andconstantly innovatingcarbon fi nanceproducts.
1.2FormationProcessofGuangdongETS ImplementationoftheETSpilotprogramisalong-termendeavor.Inlightofthe GuangdongProvincialGovernmentAgenda,theETSpilotprogramwascarriedout inthreephasesduringthe12thFive-Year-Planperiod(2011–2015):
Phase1(2012):Conductpreliminaryresearches,developanimplementationplan, anddrawupthemeasuresforallowancesadministrationandtransaction.
Phase2(2013):PutinplacetheETSadministrationmeasuresandimplementation rules,developanallowancesallocationplan,buildanElectronicInformation System(EIS),and finallykickofftheonlinetransaction.
Phase3(2014–2015):Carryoutthetransactionactivitiesinanall-roundmanner, assesstheeffectofrelevantmechanisms,andplanfortheworkofemissionstrading duringthe13thFive-Year-Planperiod(2016–2020).
1.2.1LandmarkEvents • InOctober2011,theNDRCreleasedthe NoticeonCarryingouttheWorkof CarbonEmissionsTradingPilotPrograminChina (No.2601[2011]NDRC ClimateChangeDepartment),whichdesignatesGuangdongandHubeiprovincesand fivemunicipalitiestojoininsuchpilotprogram.
• InMay2012,inordertoabsorbtheETSexperiencesbothhomeandabroad, Guangdongcompetentdepartments,researchinstitutions,andemissions exchanges,ledbyGuangdongProvincialDevelopmentandReform Commission(GDDRC),visitedUKforinvestigationsandstudy,andthen returnedtoChinatoexchangewithShanghaiandotherpilotareas.
• InAugust2012,ZhuhaiCityofGuangdonghostedaseminaronthecarbon emissionstradingpilotprogram,whichwasattendedbytheleadersandexperts fromtheNDRCClimateChangeDepartmentandotherpilotareas.Onthis occasion,GuangdongintroduceditsETSadministrationmeasures,theguidelinesforcompanies’ emissionsveri ficationandrelevantprovisionstodraw commentsandsuggestionsfromotherparticipants.
1.2FormationProcessofGuangdongETS3
• InSeptember2012,attheopeningceremonyofChina(Guangzhou)Emissions Exchange,GuangdongGovernorZhuXiaodanannouncedtheofficiallaunching ofGuangdongETSpilotprogram.XieZhenhua,DeputyDirectorofNDRC; andXuShaohua,ExecutiveViceGovernorofGuangdong,respectively, expressedtheirexpectationsforGuangdongETSintheirspeeches.
• InJune2013,XieZhenhua,DeputyDirectorofNDRC,arrivedatShenzhento presideoveraspecialconferenceontheETSpilotprogramjoinedbythe representativesfromallpilotareas.XuShaohua,ExecutiveViceGovernorof Guangdong,pledgedtokickofftheemissionsallowancestradingbytheendof theyear.
• InJuly2013,theLegalAffairsOfficeofGuangdongGovernmentbeganto solicitpublicopinionsfor GuangdongCarbonEmissionsAllowances AdministrationandTransactionMeasures.
• InSeptember2013,theGuangdongGovernmentheldaspecialconference.Xu Shaohua,ExecutiveViceGovernor,presidedoverajointsessiononlow-carbon emissions,wherehelistenedtothereportfromGDDRContheimplementation progressoftheGuangdongETSpilotprogram.
• InNovember2013,GDDRCreleasedthe NoticeonCarryingouttheWorkfor GuangdongFirstEmissionsAllowanceAllocation (fortrial),andthenamelists ofreportingcompaniesandcoveredenterprises.
• OnDecember16,2013,Guangdongheldanallowancesauction the fi rst carbonmarketdidsoinChina fulfillingatradingvolumeof3Mt;yetthe applicationvolumeonthesamedaywasabove5.07Mt,markingashortfallin allowancessupply.
• OnDecember19,2013,GuangdongETSofficiallycameonline,withthe first-daytradingvolumehitting120,029tonsandatotalturnoverofaround 7.22mlnyuan.Thestrikepricetoppedat61yuan/tandloweredat60yuan/t.
• InJuly2014 deadlineofthe2013CompliancePeriodforGuangdong-based coveredenterprises(the firstonesundertheETSregulation),thecompanies’ complianceratehithighat98.9%,andtheallowancescomplianceratewasas evenhigherat99.97%.
• InAugust2014,GDDRCissuedthe AllocationPlanofGuangdong’sCarbon EmissionsAllowancesin2014,whichmakespublicthenamelistofthecovered enterprisesandnewentrants(includingthoseexpandedandrebuilt),andthe allowances’ calculationmethodologiesfor2014CompliancePeriod.
1.2.2RelevantPoliciesandRegulations SincetheETSpilotprogramwaskickedoff,GuangdongGovernmenthasunleashedaslewofcorrespondingregulationsandrules.AsofDecember30,2015,a totalof11policypaperswereintroducedtoprovideaninstitutionalguaranteefor thesmoothoperationoftheETS.
• OnSeptember7,2012,GuangdongGovernmentreleasedthe NoticeonThe ImplementationPlanforCarryingouttheWorkforGuangdongPilotCarbon EmissionTradeScheme (No.264[2012]GDGOV),whichpresentsthe guidelinesandobjectivesforthepilotprogram,andlaysoutoverallwork arrangement.
• OnNovember25,2013,GDDRCissuedthe NoticeonCarryingouttheWork forGuangdongFirstEmissionAllowanceAllocation (ForTrial) (No.3537[2013]GDDRCRES&ENV),whichshowsthelistofthe firstbatch ofcoveredenterprisesandnewcompanies(includingthoseexpandedand rebuilt).
• OnJanuary15,2014,the17thSessionoftheStandingCommitteeofthe TwelfthGuangdongPeople’sCongressadoptedthe TemporaryMeasuresfor GuangdongCarbonEmissionManagement (No.197GDGOV),whichwasput intoeffectsinceMarch1,2014.
• OnFebruary28,2014,GDDRCissuedtheNoticeonCarryingouttheWorkfor EmissionReportingandVeri ficationofCompaniesin2013(No.573[2014] GDDRCRES&1ENV),whichmadepublicthe firstbatchofreporting companiesandcoveredenterprises.
• OnMarch18,GDDRCissuedtheNoticeontheProvisionsforEmission ReportingandVeri ficationofCompanies(ForTrial),theoffi cialProvisionsfor EmissionReportingandVerificationofCompanies(ForTrial),andthe EmissionReportingGuidelinesforCompanies(ForTrial).
• OnMarch20,2014,GDDRCissuedtheGuangdongCarbonEmission AllowanceManagementandImplementationRules(ForTrial),whichclearly providesforallowanceallocation, finalsettlement,andtransaction.
• OnJune9,2014,GDDRCissuedthe NoticeonUrgingcoveredenterprisesto PayoffTheirEmissionAllowances in2013,whichaskedallthesecompaniesto registerinGuangdongETSandsubmittheirallowanceapplicationandpayoff thefeesbeforeJuly15,2014.GDDRCalsoreleasedtheAdjustmentProgram forEmissionAllowanceAllocationin2013.
• OnAugust18,2014,GDDRCissuedtheNoticeontheImplementation ProgramforGuangdongEmissionAllowanceAllocationin2014.Inorderto copewithchangingeconomicsituationsandproduction fluctuationsofenterprises,GDDRCdecidedtoadjust2014allowanceallocationbyconsultingwith theassessmentreportofAllowanceAllocationAssessmentPanel,listeningto thefeedbacksfromcoveredenterprises,andborrowingtheexperiencesfrom bothdomesticandforeigncarbonmarkets.
• OnSeptember5,2014,GuangdongGovernmentmadepublicthelistofthe fi rst batchofrecommendedemissionveri ficationinstitutions,inlightofthe TemporaryMeasuresforGuangdongCarbonEmissionManagement (No.197GDGOV),andthroughexpertreviewandcomprehensiveassessment.
• OnSeptember18,2014,withtheauthorizationofGDDRC,GuangzhouCarbon EmissionsExchangedecidedtolaunchthe firstallowanceauctiononSeptember 26,2014;thetotalallowanceswouldbe2Mt,inlightoftheTemporary MeasuresforGuangdongCarbonEmissionManagement(No.197GDGOV),
andGuangdongCarbonEmissionAllowanceAllocationProgramin2014 (No.495[2014]oftheClimateChangeDepartmentofNDRC).
• OnJuly13,2015,GDDRCissuedtheNoticeonGuangdongCarbonEmission AllowanceAllocationProgramin2015.
1.3ExperiencesandEffectsofGuangdongETS GuangdongisaleadingdevelopedprovinceinChinaandalsoanepitomeofthe Chineseeconomicsociety,becauseofitsunbalancedlocaleconomicgrowth,an arduoustaskforcuttingcarbonemissionsandacompleteindustrialstructure.In otherwords,theproblemsthatGuangdongencountersindesigningandoperating anETSshallbeconsideredandresolvedwhenbuildinganationwideETS. Therefore,GuangdongwillbeaprecursorforanationwideETS,withdistinct valueshardlyoutpacedbythosepilotmunicipalities.Moreover,beingoneofthe twoprovincesjoininginthepilotprogram,Guangdongwillsetanexamplefor otherdevelopedprovinces.Inshort,asummarizationofGuangdong’sexperiences inETSdesignandoperationisnotonlyfavorablefortheprovincetorefine managementandtradingofemissionallowances,butalsooffar-reachingimpacton forgingaheadwithanationwideETS.
(1)Buildingaclear-cutandforcefulorganizationalstructure,andconstantly improvinglegislations.
GuangdongProvincialCommitteeofCPCandGovernmentattachhighattention tobuildinganETS.Thelow-carbonleadinggroup,whichisdirectlyunderthe guidanceoftheGovernor,mapsoutageneralplanforcarryingoutthepilot program;whiletheDivisionofClimateChangeofGDDRCtakeschargeofETS designandoperation.Inordertosmoothlycarryoutthisinitiativepilotprogram, GDDRCralliesintelligentsourcesfrommultipleacademicsectors.Itsuccessively setuptheETSResearchandDesignGroup,AllowanceManagementandTrading Workshop,andAllowanceAllocationAssessmentPanel.Theseentitiescontribute theirideasandthoughtsinpublicpolicymanagement,jurisprudence,economics, environmentalscience, financialstudies,statistics,andsystemsoftwareR&D. Thankstotheseefforts,Guangdonghasformedaworkingmechanismthatenables allstakeholders,e.g.,decision-makingorgans,researchinstitutions,industry associations,andcoveredenterprises,tojoinintheformationofETS,whichhas ensuredascientific,rational,andpracticalETSdesign.
Withregardtosupportinglawsandregulations,theGuangdongGovernmenthas comeoutwithaslewofregulationsandrulesontheETS,soastocreateasolid legalbasisforcarryingoutthispilotprogram.InJanuary2014,theGuangdong GovernmentissuedtheTemporaryMeasuresforGuangdongCarbonEmission Management(ForTrial),whichservesasaguidelineforbuildingtheETS.Onthis basis,GDDRCissuedtheGuangdongCarbonEmissionAllowanceManagement
andImplementationRules(ForTrial),andtheImplementationRulesfor GuangdongCorporateEmissionReportingandVerificationof(ForTrial),and releasedtheemissionreportingguidelinesandverifi cationspeci fications.Such regulations,togetherwiththeearlierrulesonemissiontrading,haveconstitutedan initiallegalframeworkforETSthatisscienti fic,standardized,andcarryingthe characteristicsofGuangdong.
(2)Maintainingexchangesandcooperationduringtheentireformationprocessof GuangdongETS.
DuringthepreliminarystageofETSresearchanddesign,wewerecommittedto learningthefundamentaltheoriesandglobalexperiences.Inadditiontodesk research,wevisitedEU,US,Japan,andAustraliatolearnfromthefront-lineETS expertsandpolicy-makers.Byfollowingtheglobal “cap-and-trade” principle,and consideringthecharacteristicsofGuangdongsocio-economyandemissionstructure,weabletostartthe “top-downdesign” ofGuangdongETS.
WhiletheETSisbeingoperated,wehavebeenopentoexchangeswiththe relevantresearchinstitutions,companies,andglobalexperts,followingtheglobal carbonmarkettrends,borrowingthestrengthsofforeigncarbonmarketstomakeup forourweaknessesandmitigatemarketrisks.Wehavebeencloselywatchingthe ETSoperationsoastomakethetimelyadjustment;interactingwithotherdomestic carbonmarkets,andstudyingaschemeforlinkingGuangdongwithothercarbon markets.OurexpertshavemaintainedregularcontactswiththeircounterpartsinEU andUK,andhelddiscussionswiththeexpertsofLondonSchoolofEconomicsand PoliticalScience(LSE)oneffectiveassessmentandpolicyadjustment.
GuangdongETSisexpectedtobeopenandtransparentfromdesigntooperation,andexhibititsglobalimpactduringinteractionswiththecarbonmarketsboth homeandabroad.Atthegovernmentallevel,theGuangdongGovernmentconductedin-depthexchangeswiththeHouseofCommonsEnvironmentalAudit CommitteeandCaliforniaCarbonOffi ceontheimplementationeffectsofpolicies. Atthenongovernmentallevel,GuangdongLow-CarbonEconomyPromotion Association(GDLCPA),joinedbyInternationalEmissionTradingAssociation (IETA),successivelyinvitedforeignlow-carbontechnologysuppliers,emission reductionconsulting firms,andallowancebuyerstoattendtheexchangemeetings withtheirpartnersinGuangdong.Atthecorporatelevel,severalmultinational enterprises,e.g.,BritishPetroleum(BP)andLondonOfficeofChinaNational PetroleumCorporation(CNPC),decidedtojoininGuangdongETS,whichhas arousedtheinterestoftheChinesecompaniestodevotethemselvesintothecarbon market;KPMGandVERCOhavemademassiveworkinbringingforthcarbon assetmanagementstrategyandenhancinglow-carboncompetitivelyofcompanies.
(3)De finingascopeofcoverageinascientifi cmanner,andcoordinatingthe relationbetweenthecostandeffectofemissionreduction.
ETSconstructioninvolvessevencomponents,i.e.,thescopeofcoverage,targets fortotalemissions,allowanceallocationrules,tradingmanagement,relevantlaws,
1.3ExperiencesandEffectsofGuangdongETS7
MRVregulations,andlinkswithothercarbonmarkets.Amongthem,thescopeof coverageisthefundamentalcomponent,sinceitdeterminesthevarietyandquantity ofcoveredenterprisesandthetotaltradingvolumeandallowanceallocation approach,whichwillultimatelyaffecttheETSoperationalefficiency.
GuangdongETSdesigngroup,inreferencetothecharacteristicsandrequirementsofcarbontrading,andtakingaccountofGuangdongcarbonemission structure,economicplan,emissionreductiontargets,potentialsforemission,cost foremissionreduction,anddataavailability,builta “SelectionandAssessment ModelforIndustrialSectors” todefineandassessthekeyindustrialsectorstojoin intheETS.Throughcalculationwiththismodel,fourindustrialsectorsof Guangdongwere finallyselected,i.e.,electricity,cement,petrochemicals,andsteel. Inthesesectors,thereare198coveredenterpriseswithannualcarbonemissions exceeding20,000tons.Thesecompanieshavelargeemissions,low-carbonleakage, accessibledata,simpletechnologies(favorableforallowanceallocationandverification),andgreatpotentialsforemissionreduction.Theircombinedemissions accountforaround50%ofGuangdong ’stotalemissions,indicatingthattheir involvementintheETSwillhelpGuangdongful fillitstargetsforemission reductionduringthe “12thFive-Year-Plan ” Period.Moreover,thankstolessvariety andquantityofcoveredenterprises,andlowerexpensesontechnologyandmanagement,GuangdongETSshowsmoreadvantagesinoperationefficiency,management,andtechnologycoststhanotherpilotareas.
(4)Initiatingatotalallowancemanagementsystemundertheprerequisitefor loweringcarbonintensity,andexercisingseparatecarbonbudgetmanagement andaccountingforoldandnewcoveredenterprises,whichhaveresultedin remarkableemissionreduction.
InlightofChina’soverallGHGemissiontargets,Guangdong’sdevelopment planforkeyindustriesandtargetforcontrollingtotalenergyconsumption, Guangdonghasconscientiouslycarriedoutthe “cap-and-trade” mechanismby transformingthetargetforloweringcarbonintensityintotheupperlimitof allowances,indicatingthatithasadoptedthecommonsystemsinglobalcarbon markets,andhasthetechnicalstrengthtolinkwithothermarkets.
Guangdongisnowatthestageofeconomictransition,soitisobligedtooptimizetheexistingindustrialsectors,fostergrowthofnewproductivity,andstabilize socioeconomicdevelopment.Basedonthe “cap-and-trade” mechanism, Guangdonginitiatedtheseparateemissionaccountingsystemforbotholdandnew coveredenterprises,establishedthebasicprinciplesforloweringtheemissionsof oldcompanies,andstrictlycontrollingtheemissionsofnewcompanies,soasto ensureorderlymanagementofprovincialcarbonemissionswhilesustainingeconomicgrowth.
Basedonthe “cap-and-trade” mechanism,thecoveredenterprises holding about60%ofGuangdong’stotalemissions haveachievedsignificantresultsin cuttingemissionsbymeansoftechnicaltransformationandbuildinginternalenergy managementsystem.In2013,theoldcoveredenterprisesinelectricand
petrochemicalsectorsloweredabsoluteemissions,i.e.,theiremissionsfell5–7% from2012.Allcoveredenterprisessawtheiremissionsofperunitproductiondrop by2–10%,markingagreatcontributioninful fillingGuangdong’stargetforloweringcarbonintensity.
(5)LoweringsocialcostforemissionreductionandhelpingGuangdongtransitto alow-carboneconomy.
Amulti-tiercarbonmarketsystemhasinitiallytakenshapeinGuangdong.It coversanallowancetradingmarketandaveri fiedVERmarketthatbothserve productiveenterprises,aCarbonInclusiveSystemthatbenefitsresidents,aswellas alinkingmechanismbetweenmarkets.Undersuchamulti-tierframework,covered enterprisesareabletopurchaseallowancesoracertainproportionofveri fiedVER volumetooffsettheiremissions,whichhelpscoveredenterpriseslowercostfor cuttingemissions,andstimulatesnoncompliancecompaniestojoininemission reduction.UndertheCarbonInclusiveSystem,theindividualsthathaveextravagantcarbonconsumptionshallbearsomecostforenvironmentalgovernance,while thosethatinsistongreenconsumptionandenvironmentalprotectionwillbe rewarded.
Inretrospecttotheyears’ socioeconomicdevelopmentsofGuangdong,GIEC builtaCGEModelthatreflectsthedynamiccharacteristicsoftheindustrial structureandenergyconsumptionstructureof33sectors.Theyusedthismodelto simulateGuangdongenergyconsumptionandcarbonemissionsby2020,and quantitativelyassesstheimplicationsofETSontheprovincialsocio-economy,cost ofemissionreduction,carbonprice,andemployment,andhascometothefollowingconclusions:First,ETSisabletocutGuangdongtotalCO2 emissions.By 2020,Guangdongemissionsarepredictedtoreach690Mt,lowerby30–60Mt thanbasescenario;itwillbeenoughtofulfillthetargetforloweringcarbon intensityby45%atthattime,aslongasGDPgrowthremainsat7.5%(percapita GDPandcarbonemissionsin2020willincreasefourtimesandtwotimes, respectively,from2005).Second,owingtothecapontotalemissionsandthe emissionconstraintsonindustrialsectors,GuangdongGDPgrowthmaydrop1.23–1.58%by2020.However,ifthefoursectorscouldjoinintheETS,thelowercost foremissionreductionwillmitigatetheGDPlossby0.10%,i.e.,tosavethe economiclossof9billionyuan,whichwill,inturn,greatlyimprovesocialwelfare system.Third,thecaponemissionssomewhatimpactstheemploymentinthe energy-intensivesectors,butcreatesnewjobopportunitiesonthewhole,especially inthetertiaryindustry.Thegovernmentshall,bymeansofincreasingvocational educationandtraining,helpdivertthelaborforceintothetertiaryindustryand servicesector,whichwillmitigatetheadverseimpactonmanufacturingandsocial stability.
TheanalysisofthemacroeconomicimplicationsofETSwiththeCGEModelis fromtheperspectiveofthebalancedeconomicsystem,andonaccountofthe assumptionsoffullmarketcompetition,equilibriumcarbonpricebasedonmarket transparency,andfullexploitationofreductionpotentials.However,these
assumptionsmaysomewhatvaryfromtheactualsituationsinGuangdongcarbon market,indicatingthatthesimulationresultswillhavesomeambiguities.
(6)Playingasignifi cantroleinexpeditingtheeliminationofbackwardproduction capacityandpromotingindustrytransitionandupgrading.
Inadditiontoachievingcost-effectiveemissionreduction,ETSshallbeableto promoteandguidethefulfi llmentofsocioeconomictargets.This flexiblecarbon tradingmechanismshallintegrateindustrytransitionandupgradingwithemission reduction,inanaimtograduallyraiseGuangdong’senergy-useefficiency,lowerits totalemissions,andupgradeitsindustrialstructureandenergyconsumption structure.GuangdongETSadoptsdifferentallowanceallocationapproachesfor differentindustries.Asetofstrictallocationcriteriaencouragesthecompanieswith highemissionsofperunitproductiontoturntohigh-techandlow-emissiontechnologiesandenergy-savingequipment.Asfortheenterprisesthatareblacklistedby nationalandprovincialdepartmentsfortheiroutdatedcapacity,theyhavebeen pacingupthevoluntaryeliminationofbackwardcapacityorindustrytransferring drivenbytheETSconstraintsandprofitsfromallowancetrading,whichwill quickenthereadjustmentofGuangdongindustriallayout,andbalanceregional economicdevelopment.
(7)Bolsteringthedevelopmentoflow-carbonservicesectorandincreasingjob opportunitiesinthisregard,greatlyenhancingtheabilityandawarenessof companiesforcontrollingemissions.
AftertheETSwaslaunched,Guangdonghasseenincreasingdemandfor carbon-relatedorganizationalmanagement,operationalmaintenance,third-party service,trading fi nanceandpublicity,whichhasgivenrisetoalow-carbonservice sectorconstitutedbyemissionconsulting firms,carbonassetmanagementinstitutions,andexchangeintermediaries.In2013,Guangdongestablished16institutions forcarbonemissionverification,whichhirealmost100inspectors.Iftheconsulting andservicestaffmembersinlow-carbonservicesectorwerecountedin,then GuangdongETShasdirectlycreatedabout20,000jobs.Besides,ananalysisbased onCGEModelshowsthatGuangdongcarbonmarketwillincreaseadditional 40,000–50,000jobsby2020.AlongwiththecontinuousdevelopmentofETS, carbontradingwillplayamoresignifi cantroleinindustrytransitionandjob creation.
UponlaunchingtheETS,howtouseemissionallowancesefficientlyhasbecome oneofthefactorsthataffectcorporatedecision-making.Currently,thecompanies thathavepouredfundsfortechnicalupgradingandtransformationareincorporating theprofitfromemissionreductionintotheirreturnoninvestment(ROI).Several Chinesemajorgroups,e.g.,GuangdongYudeanGroupandChinaResourcesPower HoldingsCo.,Ltd.(“CRPower”),attachgreatattentiontocarbonbudgetand emissionmanagement,andtheyhavecomeupwiththegroup-widecarbonasset managementrules.
(8)GuangdongETSisreceivingattentionfromdomesticandoverseascarbon markets.
Guangdongcarbonmarketfeatureslargecapacity,extensivecoverage,and diverseallocationpatterns.Itisthe fi rstonetocreateanallowanceauctioninChina. SuchcharacteristicshavemadeGuangdongoneofthemostinfluentialcarbon marketsbothhomeandabroad.Theinternationalmediahavebeencloselywatching theGuangdongcarbonmarket.ReuterscomplimentedGuangdongcompetent departmentsas “braveintransitionanddaringtobethe first” foritsboldnessin borrowingexperiencesfrommaturecarbonmarkets,initiatingallowanceauctionin China,motivatingcompaniestopayforemissionallowances,andaddingnew companiesintoallowancemanagement(theiroperationreliesonallocationpurchase).Guangdongcarbonmarkethasrisentotheworld’ssecondlargestemission allowancemarket.Inaddition,PointCarbonspokehighlyofGuangdongETSfor itstransparencyanddatapublicity,believingthatitisacorrectsteptowardbuilding anopen,just,andfaircarbonmarket.IETAalsoexpressedinterestinGuangdong carbonmarket,itco-sponsoredtwoseminarsinGuangdongwithGDLCPA,inan aimtoencouragecompaniestolearnfrommaturecarbonmarketsincarbonasset management,andhelpGuangdong-basedcoveredenterprisestoactivelydealwith carbontrading.
Inaddition,theEUCommission,theUKParliamentandCaliforniaAir ResourcesBoard(CARB)alsomaintainregularpolicyexchangesanddialogue withGuangdongtodiscussonthepossibilityofcooperation.TheUSEnergy Foundation(EF),theUKGlobalOpportunitiesFund(GOF)andotherinternational fundsshowexpectationforGuangdongcarbonmarket;theyhavecovered GuangdongETSintooneoftheirkeyfundingprojectstosupportGuangdong researchinstitutionsandtheirglobalcounterpartstoworktogetherinfrontier researchaboutcarbontrading.
Chapter2 GlobalETSOperationandTheirMerits andDemerits SincetheKyotoProtocol(KP)wassignedin1997,allpartiestotheKPhavebeen activelyexploringthepathtotransittoalow-carboneconomy,andusingmarket mechanismtocutGreenhouseGas(GHG)emissionsandsavethecostforemission reduction.OnJanuary1,2005,EuropeanUnionEmissionTradingScheme(EUETS) waslaunched,whichwasfollowedbyRegionalGreenhouseGasInitiative(RGGI), MidwesternGreenhouseGasReductionAccord(MGGRA),WesternClimateAction Initiative(WCI),andCaliforniaCap-and-Trade.Australiaachievedsignificant reductionresultsfromthe fixed-carbonemissionreductionsystem.NewZealand EmissionTradingScheme(NZETS)hasincludedagriculture, fishery,andforestry intogovernance,sinceagricultureisthecountry’spillarindustry.JapanstartedVER since1997andhasformedacap-and-tradesystematthemunicipallevel.
InadditiontothecontractingpartiestotheUNFCCC(seeAnnexI),some non-contractingpartiesalsopledgedtojoininthisemissionreductioncampaign. Forexample,Chinadefi nedsevenprovincesandmunicipalitiestocarryoutthe ETSpilotprogram,andthenannouncedattheParisClimateConferencein2015 (COP21)tolaunchthenationwidecarbonmarketinaround2017.Mexicosetthe targetsandspecificmeasuresforemissionreductionby2020.SouthKoreastarted exercisingtheETSsince2015.Indiahasbeenmakingeffortsindeveloping renewablesandamarket-orientedenergymechanism.
2.1ConstructionandOperationofGlobalETS 2.1.1EUETS EUhasallalongbeenaninitiatorandforerunnerinrespondingtoclimatechange. From1992to2008,theUKhadpromulgated73policiestodealwiththechallenges posedbyclimatechange,andhasachievedsignificantresults[1].AftertheKPtook
© ChinaEnvironmentPublishingGroupCo.,Ltd.andSpringerNature SingaporePteLtd.2019 D.Zhaoetal., ABriefOverviewofChina’sETSPilots, https://doi.org/10.1007/978-981-13-1888-7_2
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was always up to time in the morning. Cobbett was never too late for an appointment in his life. Those are the men for my money.’
‘How is dear Mrs. Piper?’
‘Well, I think the missus is a trifle better this morning; but she mends very slow, poor soul. I don’t believe the doctors can do much for her.’
Bella sighed, and shook her head sadly, and then went tripping upstairs to the schoolroom, leaving Mr. Piper standing at the diningroom door looking after her.
‘A pretty little girl,’ he said to himself, ‘neatly finished off, like a well-made carriage, or an English watch. No scamping about the workmanship. Poor Moggie never had as pretty a figure as that, though she was a trim-built lass when she and me was courting.’
One day, when Bella had finished the weary round of lessons, and had nearly addled her brains in the endeavour to awaken Brougham’s sluggish mind to the difference between the active and the passive voices of the verb ‘amo,’ she paid her usual visit to Mrs. Piper, and found that lady in tears over a book of sermons.
‘Dear Mrs. Piper,’ cried Bella, with a sympathizing look, ‘have you been feeling worse this morning?’
‘No, Bella, bodily I’m much the same, but I’ve been giving way. It’s very wrong of me, I know, but there are times when I do give way. To-day I haven’t been able to feel quite happy in my mind. I don’t feel my calling and election sure. I don’t feel myself sealed with the seal of righteousness. I don’t feel myself a chosen vessel.’
‘You to say this, dear Mrs. Piper! you who have been so good!’
‘If goodness lies in reading sermons, Bella—and in constant attendance at chapel or church, I may say I have done my duty. We were chapel people in Great Yafford, you know, my dear; but when we came to the Park, Piper and me both felt that chapel wasn’t consistent. Such a house as this, and seven indoor servants don’t accord with chapel—so we became Church of England people, as you know, Bella; but I don’t think I ever felt so sure of salvation since.
Mr Dulcimer is a fine preacher, but he has never given me assurance of salvation. No more has Mr. Culverhouse, though his sermons go through my heart like an arrow. Church is very nice, Bella, and I don’t deny that the bonnets and general appearance of the congregation bear a higher stamp, but chapel is the place to make a sinner comfortable in his mind. Since I have been confined to these rooms, Bella, and my mind has been taken off the housekeeping, I feel there is something wanting. I should so like to have a little talk with Mr. Mowler, of Zion Chapel, our old minister. I know that he would understand me, and——’
‘Not better than Mr. Culverhouse,’ cried Bella, eagerly. ‘You don’t know how good he is, how tender of one’s feelings, how sympathetic. I have visited among his poor, and have heard him talk to sick people. He is an angel of consolation. Do let him come and sit with you, and read or talk to you.’
‘I shouldn’t mind,’ said Mrs. Piper, ‘but I’m afraid his views are not evangelical enough for me.’
‘I don’t know much about his views, but I know it is beautiful to hear him talk. Shall I ask him to come this afternoon?’
‘You may if you like, Bella, if you can take such a liberty. I want some one to strengthen my hope of redemption. There was a time when I believed myself one of the elect, but sitting alone up here my thoughts have dwelt upon many things that never troubled me when I had the free use of my limbs. I begin to think that church-going and pious reading may not be all in all. I have been like Martha, troubled about many things. I have worried myself too much about the things of this world. I have not considered the lilies of the field, or the birds of the air. I have not been grateful enough for my many blessings, or kind enough to my neighbours. Providence has showered wealth upon me and Piper, and I’m afraid we might have made a better use of it.’
‘I am sure you have been kind to me,’ said Bella.
‘I might have been kinder. I’m afraid I’ve only been kind because you’ve been useful to me. I suppose there’s some spots and stains
in the lives of the best of us; but my life seems to me all blackened over with weeds and foul spots when I look back upon it. Oh, Bella, to think of the many things I might have done! There’s my own blood relations! I’ve kept them at arm’s length, only because I thought their clothes and manners would be a blot upon this house. I’ve been a slave to this house, and the slavery has killed me. I was a happier woman when we lived in the Great Yafford Road, and when I helped to make the beds and dust the rooms every morning, and made my own pastry and cakes. That was what I was born for, Bella, not to be cheated and made light of by a parcel of stuck-up servants.’
‘I shall pass Mr. Culverhouse’s lodgings as I go home,’ said Bella. ‘I’ll ask him to come and chat with you.’
‘You may, my dear; though I don’t feel that I shall get the same comfort from him that I should from Mr. Mowler.’
Bella walked briskly through the Park, reflecting on the foolishness of human nature. Here was Mrs. Piper, to whom had been given such great prosperity, and who had made so little use of her advantages, frittering away life upon trivial anxieties, and missing the chance of happiness. She looked along the fine old avenue, and thought how much grandeur and importance a sensible young woman like herself might have derived from such surroundings. But on poor Mrs. Piper all these good things had been thrown away. That poor dull bit of agate looked ridiculous in the splendid setting which would have been quite in harmony with a shining little gem like Bella Scratchell. It was a clear bright winter day, the sky blue, the moor a warm purple, the leafless woods lightly powdered with snow, white patches lying here and there among the dark trunks of oak and elm. Bella walked quickly through the Park and along the high road leading to the village.
CHAPTER VII.