Less than one year ahead of the scheduled start of the national ETS in China, the southeastern province of Fujian will launch its own regional ETS. In early December, the Fujian Development and Reform Commission released a series of documents providing details of its ETS, including rules and guidelines on: MRV, allocation, offset usage, market management and trading (Chinese). A preliminary general legal basis (Chinese) was also released in September 2016.

The ETS will cover 277 companies from 25 sectors whose annual energy consumption is above 10,000 tons of coal equivalent in any year between 2013-2015. These include all eight sectors that will be covered by the national ETS, as well as the local ceramics industry and additional service sector companies.

Initially, allowances will be distributed free of charge based on: (1) benchmarks (electricity generation, cement, aluminum and plate glass industries); (2) historic emissions (household and sanitary ceramics); or (3) historic carbon emissions intensity (all other sectors). Auctions may be used to complement free allocation, as well as to stabilize the market in case of market fluctuations. Regulated entities can submit Chinese Certified Emissions Reductions (CCER) credits) to meet up to 5% of their compliance obligation. Additionally, the Fujian ETS also lets entities submit local forestry credits (Fujian Forest Certificated Emission Reduction (FFCER) credits) to meet up to 10% of their compliance obligations. Regardless of the type of credit, the overall share of offsets must not exceed 10%.

No official starting date has been published yet, but the first compliance cycle will cover emissions from 2016 and will end on 30 June 2017.

Fujian has to reduce its carbon intensity by 19.5% compared to 2015 levels by 2020 according to the work plan on GHG emissions control for 13th Five Year Plan that was released in October 2016. Read more on the provincial reduction targets here.