In 2017, the People’s Republic of China (hereafter, “China”) decided to implement
a national emissions trading scheme (ETS) to limit and reduce CO2 emissions in a cost-effective
manner. Set to start in 2020, the ETS will initially cover coal- and gas-fired power
plants. It will allocate allowances (also known as permits), based on the plant’s
generation output, with a different benchmark for each fuel and technology. China’s
ETS, set to expand to seven other sectors, will be the world’s largest by far, covering
one-seventh of global CO2 emissions from fossil-fuel combustion.