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IEA calls for China’s ETS to

play key role in clean energy

CHINA THE IEA has called for China’s emerging emis- on each plant’s generation output, with specific
sions trading scheme (ETS) to play a key role in benchmarks for fuel and technology.
accelerating a clean energy revolution and in aid- Coal-fired power plants account for almost
ing China’s recovery from the economic effects of half of China’s CO2 emissions from fossil fuel
coronavirus (COVID-19). combustion. Reducing emissions from coal-fired
The ETS could be a central pillar of China’s power plants will therefore be essential to achieve
power sector transformation if designed differ- China’s low-carbon goals, and these plants will
ently, the IEA warned be the key sources covered by the ETS.
The body stressed that given China’s position In its report, the IEA set five priorities for Chi-
as the world’s largest emitter and consumer of na’s national ETS implementation.
fossil fuels, the success of China’s ETS has impli- Beijing should launch the first compliance
cations for the whole world. period of the ETS for the power sector in 2020,
The IEA said in a recent report on China’s with more stringent benchmark levels and with a
Emissions Trading Scheme that the present post- single benchmark for conventional coal.
COVID-19 time makes it even more important It should collect unit-level data and encour-
moment for China’s policymakers to embrace age units to monitor their CO2 fuel factors.
the expanded use of market mechanisms. The government should adjust and
The report stresses that calibrating and effec- strengthen the benchmark values, taking into
tively co-ordinating the introduction of a nation- consideration 2020 data, including changes in
wide ETS could prove to be a key factor in aiding monitored units for the next compliance period.
China’s recovery from the economic effects of Crucially, the government must integrate
coronavirus. auctioning to create a useful revenue stream, and
China started the implementation phase of use targeted measures to address distributional
the national ETS in 2017 to limit and reduce CO2 issues and to guarantee power and heat security
emissions in a cost-effective manner. and affordability.
The ETS could become a major climate Finally, Beijing must define the ETS role, and
policy tool to help China realise its Nationally develop a roadmap and timeline for a multi-step
Determined Contribution (NDC) to the Paris approach in order to merge benchmarks includ-
Agreement on climate change and its long-term ing other power technologies, such as CCUS,
low-carbon strategy. The first compliance period low-carbon and renewables.
is anticipated to start in 2020. It must also define CO2 absolute cap trajec-
The national ETS will initially cover coal and tory and integrate more advanced ETS flexibility
gas-fired power plants. Allowances to emit CO2 mechanisms.™
(also known as permits) will be allocated based

Week 26 01•July•2020 www. NEWSBASE .com P7