Emissions Trading in China: An opportunity for renewable energy?

The report examines the potential for China to use revenues from a national emissions trading scheme (ETS), expected by 2016, to fund renewable energy. While experts agree that earmarking is feasible, they suggest that funds should target less mature technologies like tidal and geothermal power rather than established wind and solar PV, which are already well-financed. Short-term revenues from auctioning allowances are expected to be small, but long-term potential exists if political will remains constant. Governance challenges include the need for transparency, the harmonization of monitoring, reporting, and verification (MRV) rules across regions, and the decision between centralizing or localizing fund management.

• China operated seven ETS pilots as of November 2014 in Beijing, Tianjin, Shanghai, Chongqing, Guangdong Province, Hubei Province, and Shenzhen, with a national scheme planned for 2016.
• Experts believe that auctioning emissions allowances is the primary method for generating revenue, though short-term yields are expected to be low because pilots are currently focused on establishing best practices rather than revenue generation.
• While earmarking ETS revenue for renewables is considered feasible, experts argue that established technologies like onshore wind and solar PV are already well-financed; instead, they recommend targeting less mature, higher-risk technologies such as tidal and geothermal energy.
• There is a projected funding gap for renewable energy subsidies; CNREC estimated subsidy costs at US$10 billion to $12 billion per year for 20132015, with costs potentially outstripping electricity surcharge revenues by approximately US$26 billion over the 12th Five-Year Plan period.
• Governance of the earmarking scheme faces challenges regarding transparency, the need for a cross-departmental or specialized agency, and the difficulty of harmonizing monitoring, reporting, and verification (MRV) rules across different provinces.
• Experts suggest that public funding from ETS revenues should act as a guidance fund to attract private sector investment through public-private partnerships (PPP), particularly for risky low-carbon projects like carbon capture and storage (CCS).

APA

Wang, H. (2015). Emissions Trading in China: An opportunity for renewable energy? International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/emissions-trading-in-china-renewable-energy.pdf

Chicago

Wang, Hanjie. Emissions Trading in China: An opportunity for renewable energy? International Institute for Sustainable Development, 2015. https://www.iisd.org/system/files/publications/emissions-trading-in-china-renewable-energy.pdf.

Wikipedia

{{cite report |last1=Wang |first1=Hanjie |title=Emissions Trading in China: An opportunity for renewable energy? |publisher=International Institute for Sustainable Development |date=April 2015 |url=https://www.iisd.org/system/files/publications/emissions-trading-in-china-renewable-energy.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{wang2015emissions, author = {Wang, Hanjie}, title = {{Emissions Trading in China: An opportunity for renewable energy?}}, institution = {International Institute for Sustainable Development}, year = {2015}, month = apr, url = {https://www.iisd.org/system/files/publications/emissions-trading-in-china-renewable-energy.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }