Shenzhen City, Beijing Municipality, Tianjin Municipality, Shanghai Municipality, Chongqing Municipality, Hubei Province, and Guangdong Province were selected as first pilot provinces and municipalities for carrying out carbon emissions trading. This was in accordance with overall rules for responding to climate change set out by the Central Committee of the Chinese Communist Party and the State Council of China. This was in order to: implement the requirements of the 12th Five-year Plan for gradually establishing the carbon emission trading market in China; promote the use of the market mechanism to achieve China’s objective of controlling greenhouse gas emissions in 2020 and doing so at an affordable cost; and accelerate economic development and industrial structure upgrading.

By the end of 2016, 635 out of the 636 enterprises included in the carbon trading control system in Shenzhen had completed the 2015 carbon trading compliance work on time and in full. In terms of the reduction of structural emissions achieved under the Shenzhen carbon emission trading system has achieved notable results since going into operation in 2013. The carbon emissions of 636 enterprises included in the system of control fell by 5.81 million tons in 2015, down by 18.2% since 2010. Shenzhen has also made adjustments and improvements to its carbon trading allowance allocation system: in 2016 it adjusted the allowance allocation method for participating enterprises to the advanced carbon intensity allocation method, and used this method to calculate the 2016 target carbon intensity for participating enterprises. Shenzhen has also continually increased efforts to promote the regional carbon market, strived to build the first cross-regional carbon trading market in China, and established the first carbon market capacity-building base in China – the Shenzhen Center for National Carbon Market Capacity-building.

What is the innovation/policy/project/technology? How does it work?

Before the launch of its carbon emissions trading market, Shenzhen calculated the urban carbon emission list, which set the total carbon emission for the enterprises included in the control system and allocated an allowance for the three years of the pilot period. During the carbon emissions trading pilot period, participating enterprises must first quantify and report their own annual carbon dioxide emissions, and then have independent third-party verification institutions verify their emission reports. They must also guarantee that their carbon intensity does not exceed the carbon intensity target set by the government. Participating enterprises whose carbon emission is lower than their allowance may carry over surplus allowance to the following year for use or sell it directly on the carbon market for profit.

In order to establish a system complete with both legal provisions and government regulations, Shenzhen has developed and passed Provisions of Shenzhen Special Economic Zone on Carbon Emission Management, Interim Measures of Shenzhen City for the Administration of Carbon Emissions Trading, and other relevant documents. And the units included for control are accurately monitored and strictly verified: any relevant noncompliance and counterfeiting, etc, which is discovered will lead to comprehensive verification, and, once the noncompliance is confirmed, corresponding punishment, including fines, and even blacklisting, will be conducted. Once blacklisted, enterprises will be subject to “one-vote veto” in terms of finance and taxation, etc. In this way, this strict control mechanism forces units included for control to actively practise energy conservation and emission reduction.

What are the CO2 reduction goals/acheivements?

The Shenzhen carbon emissions trading system covers 40% of carbon emissions in Shenzhen, with the main objective being to restrict the total emission of those enterprises included in the control system, and reducing the carbon intensity of enterprises included in emission control by 25% by 2015 from a 2010 base. Statistics show that by 2015 the absolute carbon emission of units included for control had declined by 5.31 million tons since 2010, with the carbon intensity down by as much as 41.8%, far exceeding the 21% reduction target issued by China to Shenzhen during the 12th Five-year Plan period.

Next steps

In the 13th Five-year Plan of Shenzhen City for Responding to Climate Change, Shenzhen clearly set out its ambition to: strengthen carbon emission management of enterprises included in government carbon emission control; implement a third-party verification and reporting system and an allowance compliance system of carbon emission; promote the energy conservation and emission reduction of enterprises; promote the construction of an energy management system and energy management centre for key energy-using enterprises; focus on advancing the top 10,000 enterprises’ energy-saving and low-carbon activity; strengthen demand-side management, and boost end energy-using products to improve energy efficiency.

In addition, according to 2016 Work Summary and 2017 Work Plan of the Development and Reform Commission of Shenzhen Municipality, Shenzhen will further improve the carbon emission trading system in the following ways. Firstly, continue to expand coverage of the city’s carbon trading in the transportation field; actively explore including taxi and public building enterprises in the carbon emission trading system; actively introduce new trading categories and energetically develop carbon finance by giving full play to the advantages that Shenzhen boasts of high market activity and a developed information and financial industry. Secondly, cooperate on completing arrangements for building a national market and ensure the smooth transition from the Shenzhen carbon market to the national carbon market, according to the work goal of the National Development and Reform Commission, which aims to launch national carbon emissions trading in 2017. Thirdly, further progress the training for national carbon market capacity-building with the Shenzhen Center for National Carbon Market Capacity-building as the platform, and take the above opportunity to attract other cities in China which have a good base in this field which value low-carbon development, especially cities which have a similar industrial make-up, in order to carry out in-depth regional carbon market cooperation with Shenzhen. Fourthly, strengthen carbon trading publicity, and carry out relevant training on carbon trading; continue to increase carbon trading publicity and training efforts for the new enterprises included for control, and gradually increase the public’s awareness and acceptance of carbon trading; conduct extensive publicity through media, social and government platforms, etc; actively respond to the demands of enterprises included for control, and complete the compliance work for 2016.

Contact information

Development and Reform Commission of Shenzhen Municipality
Carbon Emission Trading Office
Tel: +86 755 8812 7419
zwgk@szplb.gov.cn