Advancing emissions trading with dialogue: policy dialogue between EU and China

As the world's largest emitter, China is actively constructing its national emissions trading system (ETS) as a key policy tool to mitigate emissions. A three-step roadmap was released in 2017 when China launched its ETS politically. The roadmap is guiding the country to develop its carbon market, which is expected to move into the next phase of implementation with reinforced design features intended to support what is expected to be a well-functioning market by 2020. By then, China is expected to host the world’s largest carbon market.   

Against this background, the European Commission is funding the project “Platform for Policy Dialogue and Cooperation between EU and China on Emission Trading” to enhance cooperation between the EU and China on climate change by establishing a regular political dialogue on emission tradings as well as continuing to support China in building its nation-wide ETS. ICF is leading a consortium to implement this project and sub-contracted adelphi to provide expertise and knowledge in the joint research component of it. The main purpose of these joint research activities is to identify appropriate and tailor-made solutions to any problems that may arise from the roll-out of China’s national ETS.

adelphi experts worked with other European experts and selected Chinese experts. Their goal is to combine the in-depth knowledge they have of carbon markets both in Europe and worldwide with an understanding of China’s regional ETS pilots and the overarching domestic political and economic context. Based on this work, they provided policy recommendations on critical issues relating to the transition from regional pilots to the national ETS. A broad group of stakeholders have also been consulted during the research. The findings and outcome of the research activities have been submitted to the Ministry of Ecology and Environment of China, the main ministry responsible for the ETS.