Capacity Building for the Establishment of Emissions Trading Schemes in China Last Update April 2018 Coverage GHG CO2 Scope 824 enterprises 2016 Sectors Power, water, gas, manufacturing, buildings, and transportation port, subway, buses Threshold Over 3.000t CO2/year for enterprises, different thresholds for buildings Allowance Allocation Free allocation is based on different ologies. Benchmarking based on sectoral historical carbon intensity is used for the water, power and gas sectors and grandfathering for other sectors, maily transportation. The final number might be updated based on actual output. A small share can be auctioned. Market Stabilization Instruments The Shenzhen government is able to sell extra allowances from a reserve at a fixed price.These allowances are intended for compliance only and cannot be traded. Up to 10 of the allocation can be bought back. Compliance Timeframe for compliance Annual Fine for Non-Compliance If a company fails to surrender enough allowances, fines three times the average market price of the past six months will be imposed. The missing allowances can be withdrawn from the account of the company or deducted from next years allocation. Other fines If false ination is being provided, a penalty of three times the average price of the past six months can be imposed for the difference between reported and actual emissions. Disturbing the market order can lead to fines of up to CNY 100,000. Offsets Only Chinese project-based carbon offsets CCERs are allowed to offset up to 10 of emissions. Credits from hydro projects are not allowed and there are further geographic restrictions. 2020 Reduction Target Emission Coverage Compliance Rate Launch Date Shenzhen ETS 40 of gross emissions 99 2016 45 CO2 intensity vs. 2005 18 June 2013