On December 10, the Department of Climate Change of the National Development and Reform Commission (NDRC) published the “Interim Measures for Carbon Emissions Trading” (Chinese) that provide the basic rules for the national ETS that is scheduled to start in 2016. The measures will enter into force in January 2015. The document mainly focuses on the division of responsibilities between national and provincial authorities and some core principles.

The NDRC will act as the national competent authority in the name of the State Council and will be responsible for the determination of caps at the national and provincial level, as well as the definition of national standards for scope and coverage, allocation methods and monitoring, reporting and verification (MRV) requirements. On the provincial level, the Development and Reform Commissions (DRCs) are responsible for the implementation of the ETS in their region. They will have a certain degree of flexibility regarding the inclusion of additional sectors and are also allowed to make allocation methods more ambitious.

Interim measures on allowances and allocation are also outlined. Initially, two types of certificates will be recognized by the scheme: emission allowances and China Certified Emissions Reductions (CCERs). The latter constitutes a domestic offset program that is already being utilized by the pilot ETS. Allocation will mainly be free, with the aim to gradually reduce the amount of free allocation. Finally, an annual MRV cycle and an opt-in for non-covered entities to participate in trading (without any reduction obligations) were also outlined.