The Shanghai government recently published a list of 378 major carbon-emitting enterprises in the city that will fall under its carbon emissions trading scheme. Alongside the list, authorities also disclosed details on the allocation of emissions quotas to these firms.
The identified enterprises span eight major carbon-intensive industries, including power generation, steel, petrochemicals, chemicals, paper, aviation, cement and commercial. Notable companies named include Baosteel Group, Shanghai Electric Group and Shanghai Chemical Industry Park Development Co.
According to the announcement, Shanghai will allocate free carbon emission quotas to companies annually during the 2021-2025 period based on emissions intensity benchmarks for each industry and firms’ actual production levels. The benchmarks will be progressively tightened each year to incentivize enterprises to continually improve energy efficiency and reduce emissions intensity.
Meanwhile, companies can also trade quotas on the Shanghai Environment and Energy Exchange to meet compliance obligations. By placing a price on carbon, the trading scheme aims to economically incentivize Shanghai’s top emitters to deploy clean energy and low-carbon technologies.
The launch of carbon trading in Shanghai, home to heavy industry and China’s financial hub, represents an important step in the nationwide roll-out of what will eventually become the world’s largest carbon market. As more cities and provinces implement local schemes, an integrated national market is expected to be operational by 2025.
