Chinese national carbon trading scheme

The Chinese national carbon trading scheme is an intensity-based trading system for carbon dioxide emissions by China, which started operating in 2021.^[1][2] This emission trading scheme (ETS) creates a carbon market where emitters can buy and sell emission credits. The scheme will allow carbon emitters to reduce emissions or purchase emission allowances from other emitters. Through this scheme, China will limit emissions while allowing economic freedom for emitters. China is the largest emitter of greenhouse gases (GHG) and many major Chinese cities have severe air pollution.^[3] The scheme is run by the Ministry of Ecology and Environment,^[1] which eventually plans to limit emissions from six of China's top carbon dioxide emitting industries.^[4] In 2021 it started with its power plants, and covers 40% of China's emissions, which is 15% of world emissions.^[5] China was able to gain experience in drafting and implementation of an ETS plan from the United Nations Framework Convention on Climate Change (UNFCCC), where China was part of the Clean Development Mechanism (CDM).^[3] China's national ETS is the largest of its kind,^[5] and will help China achieve its Nationally Determined Contribution (NDC) to the Paris Agreement.^[3] In July 2021, permits were being handed out for free rather than auctioned, and the market price per tonne of CO₂e was around RMB 50, far less than the EU ETS and the UK ETS.^[5]