Overview

Description

The Chongqing pilot ETS is a cap-and-trade emissions trading scheme. Auctioning was introduced in 2021. While the scheme implemented absolute caps until 2021, a revision of the scheme in 2022 changed the allocation approach such that there are no longer absolute caps and allocation is determined on a bottom up intensity basis.

Recent Developments

In September 2024, Chongqing EEB published the allocation plan for the compliance year 2023. In this plan, it introduced a “synergies mechanism for reducing pollution and carbon emissions,” rewarding entities that achieve emission reduction and air pollution control with a 0.3 to 0.5% increase in their allowance allocation. In addition, Chongqing became the fifth city in China to implement the “electricity and carbon synergy” policy and allowed entities to offset up to 8% of the shortfall in allowance with eligible non-fossil energy purchases outside of the city (see ‘Offset Credits’ section).

Coverage

The coverage threshold for the scheme is 26,000 tCO2 per year or energy consumption of 10,000 tonnes of coal equivalent (tce) per year. The scheme applies to GHG emissions (CO2, CH4, N2O, HFCs, PFCs, SF6) from the industrial sectors.

Pricing and Allocation Approaches

Free allocation (Grandfathering), Auctioning

Compliance Approaches

Annual

Relation to Other Compliance CPIs

The Chongqing pilot ETS is to be merged into the national ETS under unified rules and a detailed transition plan is under development.

Covered Sectors

Industry

Waste