Capacity Building for the Establishment of Emissions Trading Schemes in China Last Update April 2018 Coverage GHG CO2 Scope 298 enterprises 2017 Sectors Airports, aviation, chemical fiber, chemicals, power and heat, water suppliers, hotels, iron and steel, petrochemicals, ports, shipping, non-ferrous metals, building materials, paper, railways, rubber, textiles and some service sectors Threshold Over 10.000t CO2/year for most sectors, 100.000 t for shipping and 20.000 t for new entrants in power and industry sectors Allowance Allocation Free allocation based on different ologies for different industries. Sector-specific benchmarks are applied for power, heat and manufacturing; historic emissions intensity for industry, aviation, ports, shipping, and water suppliers while historic emissions are used for buildings, the commercial sector and for industrial companies with complex products or a considerable change in their emission boundary. The calculation is mostly based on 2014-2016 data. Ex-post allocation adjustments are possible and a small share can be auctioned. Market Stabilization Instruments The local government is able to auction allowances and the Shanghai Environment and Energy Exchange can temporarily suspend trading or impose holding limits to stabilize the market. Compliance Timeframe for compliance Annual Fine for non-compliance If a company fails to surrender enough allowances, fines ranging from CNY 50,000 to CNY 100,000 can be imposed. However, the company still has to surrender the adequate amount of allowances. Further sanctions may be imposed such as publication, an entry into the credit record or cancelation of access to special funds for energy conservation and emissions reduction measures. Other fines Failing to an emissions or verification report on time leads to a fine ranging from CNY 10,000 to CNY 50,000. Offsets Only Chinese project-based carbon offsets CCERs from before 2013 are allowed to offset up to 1 of emissions. Credits from hydro projects are not allowed. 2020 Reduction Target Emission Coverage Compliance Rate Launch Date Shanghai ETS 57 of gross emissions 99.7 2016 20 .5 CO2 intensity vs. 2015 26 November 2013