EDF, China Electricity Council Agree to Collaborate with Key Players in US and China Carbon Markets

Agreement will ensure successful participation in and operation of China’s carbon market

September 24, 2019
Raul Arce-Contreras, rcontreras@edf.org, (212) 616-1428

Environmental Defense Fund (EDF) and China Electricity Council (CEC) will deepen and facilitate US-China power sector collaboration under a memorandum of cooperation signed Monday, at the “US - China Power Sector Carbon Market Outlook” workshop held by EDF alongside the UN Climate Action Summit. The organizations aim to ensure successful participation in and operation of China’s power sector carbon market.

EDF and CEC will help the power sectors of the US and China exchange expertise and experiences, promote emissions reduction, build trading capacity for China’s power sector, and jointly conduct research to address the challenges power sectors face in carbon markets. In June 2019, EDF supported CEC in launching the Electricity Low-carbon Development Research Center to provide technology and capacity building for China’s carbon market.

Gwen Ruta, EDF’s Executive Vice President, said: “For the past 30 years, Environmental Defense Fund has supported the development of a market mechanism to help China address its environmental problems. Our experiences show that successful participation of power sectors in carbon markets determine the long-term viability and effectiveness of carbon pricing mechanisms. By working with the China Electricity Council, we’ll help the power sectors of the US and China cooperate towards the development of a successful carbon market in China.”  

In December 2017, the National Development and Reform Commission of China issued the “National Carbon Emissions Trading Market Construction Plan (Power Generation Industry),” marking the official launch of the carbon emission trading system. China’s power sector is the first sector to be covered by the system. The market covers about 1,700 companies, which have annual emissions of about 3.5 billion tons of carbon dioxide and account for about one-third of China’s carbon emissions. It is by far the world’s largest carbon emission trading market.

From 2006 to 2018, China’s power industry reduced carbon dioxide emissions by about 13.7 billion tons, compared with 2005.
“A successful national carbon market in China not only can drive down carbon emissions by significant and urgently needed levels, it can also accelerate low-carbon development and structural transformation of China’s power industry,” added Ruta. EDF will continue to support and closely monitor its development.

Wang Zhixuan, the Vice President of CEC said: “We have made great progress in developing non-fossil energy and reducing the use of coal. There is little room for further utilizing the energy efficiency of power plants to improve carbon reduction.” Wang also said China needs to tap the capacity of low-cost carbon reduction through an effective carbon market, to increase the proportion of non-fossil energy.

The Regional Greenhouse Gas Initiative, or RGGI, is currently the sole carbon market in the world that covers the power sector exclusively. 

Ben Grumbles, the Chair of RGGI Inc. and Secretary of the Maryland Department of the Environment, said “The program’s participating states have reinvested proceeds in strategic programs that have resulted in additional millions of emissions avoided, billions of dollars in consumer savings, hundreds of lives saved and increased resiliency in the power sector.” 

Andrew McKeon, the Executive Director of RGGI Inc., added “Given the on-going strategic reinvestment of proceeds since RGGI’s implementation in 2009, the region has achieved a reduction of over 50% in CO2 emissions from the power sector.” 

More than a dozen representatives from major power companies in China, including China Energy Investment Corporation, China Huaneng Group, China Huadian Corporation, State Power Investment Corporation, China Datang Corporation and Shenergy Company Limited, participated in the Sept. 23 forum remotely through video connection in Beijing.

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