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China's emissions trading system (ETS) could help power sector emissions to peak before 2030 and reduce coal's share of the generation mix to 50pc or less by 2035 if it adopts more stringent benchmarks than it currently has, according to a report published by the International Energy Agency (IEA). Without tighter allocation benchmarks for coal-fired plants or the introduction of allowance auctions, the scheme could fail to encourage any significant coal-to-gas fuel switching.

 

In a report — The Role of China's ETS in Power Sector Decarbonisation — published on 13 April, the IEA examined the efficacy of China's ETS under various scenarios to assess the feasibility of the country's long-term climate goals as laid out by President Xi last year.

 

The IEA's outlook considered a no-carbon-pricing counterfactual scenario, an ETS scenario with free output-based allowance allocations and increasingly stringent benchmarks for coal, and an ETS auctioning scenario where emissions allowance auctioning is gradually introduced.

 

The report found that assuming an effective and evolving allowance price, Chinese power sector emissions could peak before 2030 if allowance allocation benchmarks for coal-fired units are gradually lowered, ensuring smooth implementation of the ETS. The IEA further suggested that introducing auctioning into the Chinese ETS would accelerate the process.

 

The IEA also said that coal's share of the generation mix would fall to 50pc by 2035 in the ETS scenario, but would decline to 40pc by 2035 in the ETS auctioning scenario, as allowance auctions "would strengthen the competitiveness of renewables-, nuclear- and gas-based technologies vis-a-vis coal-fired plants, leading to faster decommissioning of existing coal-fired units and fewer installations of new ones".

 

Source : https://www.argusmedia.com/en/news