National Carbon Emission Trading Market Power Construction Plan (2017)

In December 2017, China issued an emissions trading scheme plan to reduce its greenhouse gas emissions. In its initial phase, the participants in the trading scheme are limited to enterprises or other other entities in the power generation industry with annual emissions of 26,000 tonnes of carbon dioxide or more. The document sets forth a three phase plan for the implementation of the trading scheme: 

In the first phase, taking approximately one year, the construction of a unified national data reporting system, registration system and trading system should be completed. An administrative management system for the carbon market should also be established. 

In the second phase, also taking approximately one year, a simulation of the scheme's operation should take place that "comprehensively tests the effectiveness and reliability of the various elements of the market, strengthens mechanisms for early warning and control of market risks, and improves the administrative management and support system for the carbon market". 

In the third phase, spot marketing trading for quotas between participants in the power generation industry should be carried out. 

Rather than a cap and trade system, allocations are made on an output-based allowance basis.