There is no kitchen waste at Li Yan’s restaurant: everything gets eaten, reused or composted.

There is no fixed menu, either. The 40-year-old chef buys seasonal local produce fresh from market vendors every day, carrying a bamboo basket on his back. Most elements in the dishes are made from scratch, whether it’s curry paste or bread. Li and his team also make bars of soap using recycled cooking oil.

Li is the co-founder of Bistro & Bowl in Dali, Yunnan province, one of China’s first restaurants to promote a philosophy of sustainable and climate-friendly food.

Although not a strictly vegetarian restaurant, one of its main draws is its variety of plant-based dishes, which usually make up more than three-quarters of the daily menu. Recent hits have included a salad with local goat’s cheese and broccoli and rice steamed with potato wrapped in lotus leaves. Meat dishes such as beef bourguignon have also featured, but Li only sources free-range meat from local farms.

Li says he wants to use his skills to guide people to eat more healthily and sustainably for the benefit of the Earth. “If I did not do this, I would feel guilty for many, many years,” he tells China Dialogue.

According to a study published in Nature Food, more than one-third of the world’s human-caused greenhouse gas emissions comes from the food system, meaning all steps related to farming, processing, transporting, consuming and disposing of food.

Yet, most governments are overlooking the potential emissions savings that could be realised by transforming this system.

China is home to the world’s largest food system, which was responsible for roughly 13.5% of its greenhouse gas emissions in 2019. The current priority, however, is ensuring food security: in its first document released in 2023, the central government called for “enhanced efforts to stabilise production and ensure the supply of grain and other important agricultural products”. Meanwhile, President Xi Jinping has stressed the significance of food security and increased self-sufficiency – “holding the bowl safely in one’s own hand” – while also “developing ecological and low-carbon agriculture”.

Balancing this food security drive with the country’s emissions reductions goals will be a delicate task – one which experts suggest sits heavily on the plate of government and producers, and the policies and changes they choose to serve up. But consumers also have a seat at the table, and bottom-up action, such as Li’s efforts, could be transformational.

The power of the chef

Li came to understand the impact of the food system on biodiversity and climate during a cooking competition he took part in – and won – in 2020. The event was organised by Good Food Fund, a Chinese non-profit promoting the sustainable transformation of food systems.

Li, who had been a chef for nearly 20 years by then, was shocked to learn about the implications of industrialised farming and animal rearing for the planet. He also learned about how sustainable farming, cooking and dining could improve global ecology, tackle climate change and enable people to live more healthily.

“I had never thought that chefs could have so much power,” Li says. “I suddenly realised that I should do what I could to contribute to a better future for the Earth. I felt a sense of responsibility.”

In May 2021, Li and his business partner opened Bistro & Bowl in the popular tourist town of Dali. In one of the most biodiverse regions in China, the restaurant duly looks to follow the sustainability principles outlined in the Good Food Fund’s Good Food Pledge, an initiative that promotes a low-carbon lifestyle, healthy eating, seasonal produce and reductions in food waste.

Li grows more than 10 types of herbs in-house, including oregano and mint, fertilised using a liquid created with fermented food waste from the kitchen. The restaurant is also a certified participant of “Meatless Monday” through the Good Food Fund, which itself is the official Chinese partner of the global movement encouraging people to practise a plant-based diet one day a week, so as to improve personal health and the environment.

The actions taken at Bistro & Bowl are also real-life reflections of policies and documents released by the Chinese government, including an anti-food waste law introduced in 2021 and the latest dietary guidelines published in 2022 by the Chinese Nutrition Society, a national non-profit, under the guidance of the National Health Commission.

Although none of these directives were published with the direct aim of reducing carbon emissions and tackling climate change, their combined results could bring climate-positive impacts, various experts have told China Dialogue.

Curbing food waste

Elizabeth Robinson is a professor and director of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics. She tells China Dialogue that only 40% of emissions from China’s food system come from actual production, with the remaining 60% relating to processes and actions before and after this stage.

“There are opportunities to reduce emissions along the whole chain,” Robinson says. “In pre-production, fertilisers are an obvious example because you generally make them out of fossil fuels.” Nitrogen fertilisers, for example, are made by mixing nitrogen from the air with hydrogen from natural gas. “As for post-production,” Robinson adds, “one of the big problems is food waste.”

Wasting food is a global problem that has serious climate implications. A 2021 report by the United Nations Environment Programme (UNEP) estimated that roughly 17% of global food production may be wasted, including 11% in households, 5% in catering and 2% in retail (figures are rounded).

If food loss and waste were a country, it would be the third biggest source of greenhouse gas – Inger Andersen, executive director of UNEP

In China, more than 35 million tonnes of food are lost while being stored, transported and processed each year, according to statistics quoted by China Youth Daily. At restaurants, 11.7% of food is wasted by customers, averaging 93 grams per person per meal, the newspaper reports.

China has taken a series of actions to tackle food waste over the past two years to safeguard food security and promote sustainable economic and social development, among other goals.

In August 2020, Xi ordered the country to “resolutely put an end to wasting food”. The following April, the anti-food waste law was introduced, instructing all levels of government to “enhance leadership”, “determine targets and tasks” and “establish a work mechanism” to tackle food waste.

Robinson calls this “a really important policy” and notes that reducing waste can help cut emissions in two ways.

First, food production generates greenhouse gas emissions, such as those associated with fertilisers, mechanisation, rice paddies and even cows’ burping. “Producing that food just to throw it away has a big emissions implication,” she explains.

Second, if food waste ends up in landfills and is broken down by bacteria via anaerobic digestion, methane is emitted.

By simply reducing food waste, Robinson says, “there is a tremendous opportunity to reduce emissions without even changing how we farm or how we eat.”

‘Poultry-multiplying plan’

The Chinese government has also been guiding its citizens to adopt more balanced and diverse diets, though largely for health reasons.

In April last year, the country updated its dietary guidelines, mentioned above, which encourage citizens to consume “plenty of vegetables, fruits, dairy, whole grains and soybeans”, to eat “appropriate amounts of fish, poultry, eggs and lean meat” and to “limit intake of salt, oil, sugar and alcohol”.

Late last year, Xi called on the country to establish a “big food concept”, which aims to promote food diversity on both the production and consumer sides, in a key government report.

Meat consumption in China is expected to continue increasing. Amid this growth, various Chinese reports and research have been encouraging citizens to eat more poultry, instead of pork, beef or lamb, for health, to save animal feed and to protect the environment – while still meeting demand.

For example, in an article explaining the “big food concept”, Globe, a magazine affiliated to state media outlet Xinhua, underscored the importance of choosing white meat over red meat, a major driver of obesity in China.

A flagship report on the agricultural industry’s development, published by the Chinese Academy of Agricultural Sciences (CAAS), also highlighted the benefits of such a swap, as Beijing News reported. It also proposed a “poultry-multiplying plan”.

Mei Xurong, vice-president of CAAS, was quoted saying that poultry was healthier and more efficient in terms of animal feed and emissions than pork (which is the most consumed meat in the country). Mei said modelling showed that nearly 28 million tonnes of feed and over 7 million tonnes of carbon emissions would be saved if the country doubles its poultry production and uses this to replace pork, keeping overall meat production the same.

Alternatively, Mei continued, if the country maintains current beef and lamb production levels and uses additional poultry output to satisfy growing meat demand – as well as replacing some pork production – it would, according to modelling, save over 30 million tonnes of carbon emissions and nearly 15 million tonnes of feed in the year 2030.

A 2018 study published in Science magazine estimated that the greenhouse gas emissions per 100 grams of protein for pork production can be as low as one-seventh of those from beef. Emissions from poultry production, meanwhile, were estimated to be even lower, at about three-quarters those of pork per 100 grams of protein.

Globally, red meat production is the largest driver of greenhouse gas emissions from food. However, concern has also been raised over any global chicken-for-beef shift. A surging poultry industry would itself impact the environment, through air and water pollution, degradation of arable land, habitat destruction and other damages.

Haseeb Bakhtary is a senior consultant at Climate Focus, a thinktank headquartered in Amsterdam. He says it is hard to set a universal rule for people’s eating behaviours for health or environmental reasons because diets are “culturally and geographically specific”.

“What we need to reduce in Europe is meat consumption. We also need to stop wasting food at the household level, buy less and eat less [food] and replace the unhealthy components in our diets with healthy foods,” he tells China Dialogue.

“But there are many other countries in the world where people don’t have access to enough animal-based protein, for example. There, there may need to be balance to increase their meat consumption to a healthy level.”

Top-down vs bottom-up

So far, emissions reduction efforts in China’s food system have largely been driven by government policies on the production side. However, some experts believe consumers have an equally important role.

“In terms of reducing emissions and tackling climate change, many people think these are matters for the government and, therefore, require government policies and technological improvement to push forward the agenda,” Hou Bing, executive director of the Good Food Fund, tells China Dialogue.

But Hou points out that “past practices” and the findings of the latest report from the Intergovernmental Panel on Climate Change – which highlighted the insufficient global pace and scale of climate action plans – show that “emissions-reduction targets cannot be realised solely by top-down policies from the government and technological improvement”.

“To lead to changes, it also needs bottom-up [actions] and joint efforts and participation from multiple parties, such as the government, commercial and social organisations, as well as the general public,” Hou explains.

“Not only the formulation of policies needs to be based on public opinion: their promotion and final implementation will also need to depend on the levels of public understanding and acceptance.”

Hou points to the anti-food-waste campaign promoted in recent years as “an exemplary practice to showcase the joint power of policy and public opinion”.

Patty Fong, programme director of Climate and Health & Wellbeing at the Global Alliance for the Future of Food, tells China Dialogue that food systems, especially those linked to global value chains, are “locked into a system” that affects both production practices and consumption patterns. “We must look at them together holistically,” she says.

Fong thinks consumers do have a role. However, their “food environment” must be factored in, meaning, for example, what types of food are affordable or cheap, and what is being advertised to them.

“There is a role for marketers or retailers. There’s also a role for caterers – whether it’s chefs and restaurants, or healthcare, hospitals and schools,” Fong notes.

Bakhtary points out the importance of public policy: “I am usually hesitant to shift the responsibility of transforming the food system onto consumers… behaviour change takes a long time.” He says that public policy and regulation will have “a larger and more significant effect and impact” than consumer-led efforts. Ideally, grassroots initiatives and public policy should work hand-in-hand to help the food system transform from different angles, he adds.

Robinson describes three main types of environmental policies that governments can use: rules and regulations, taxes and subsidies, and nudges. “Generally,” she adds, “a combination of all three works best.”

The professor says the whole food system is often not set up for consumers to “actually be empowered to make the right choices”, and that the right policies are essential to enable people to “make good choices that are aligned with healthy eating, healthy environments and animal welfare”. As China and countries around the world strive to improve their food systems and meet climate goals, government policy is therefore “very important”: regulation, Robinson adds, can level the playing field.

This article was originally published on China Dialogue under the Creative Commons BY NC ND licence.

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At first glance, recent headlines on coal, energy and emissions in China make little sense. Coal-fired power generation grew slightly, by 1.4%, in 2022, and output in the other major coal-using sectors, steel and cement, contracted. However, the government is reporting a major increase in coal use, of 4.3%.

Clean energy installations made records, but the permitting of new coal-fired power plants also surged.

In its 2023 work plan, the government is aiming to further increase domestic coal production to support energy security, while according to the current Five Year Plan for energy (2021–25), coal is supposed to move from the mainstay of the energy system to a supporting role, and coal consumption is supposed to start falling in the 2026–30 period.

There are both real and apparent contradictions between these headlines.

Did China’s coal consumption increase in 2022?

The 4.3% increase in coal consumption and 2.2% increase in energy sector CO2 emissions in 2022 reported by China’s National Statistics Bureau are very hard to square with what we know about activity in China’s main coal-consuming sectors. This would also be the first time in almost 20 years that coal consumption increased faster than GDP, which clocked 3% growth.

A week after the release of the official government data, the International Energy Agency released its numbers on China’s CO2 emissions, based on more detailed data obtained from government sources. These numbers added to the confusion, as they indicated a much smaller 2% increase in coal consumption, and a fall in fossil fuel emissions. However, the IEA also said that CO2 emissions in the power sector increased 3%, which doesn’t align with the reported 1.4% growth in coal power generation and falling power generation from gas.

Factories had to burn more coal to get the same energy – and produce the same emissions

A part of the increased coal consumption is due to a switch from gas to coal prompted by sky-high gas prices. However, since gas only makes up 8% of China’s energy mix, while coal makes up 56%, and gas consumption only fell by 1%, this cannot be the main explanation.

The most likely cause of the conflicting data, then, is that more coal was used in 2022, but it was of lower quality. Average energy content and carbon content of coal fell, meaning power plants and factories had to burn more coal to get the same amount of energy – and produce the same amount of emissions.

Coal consumption can be measured in two ways: the tonnes of coal used, or the amount of energy contained by the coal. Unlike oil, gas and electricity, the energy content of coal varies widely, with the most energy-dense varieties containing up to three times as much energy per tonne as the lowest-quality, commercially-used varieties. Therefore, accounting for changes in coal quality is a key requirement for accurate statistical reporting.

The background to the changes in coal quality is that the Chinese government has been pushing coal miners to increase output aggressively in response to the coal shortage of 2021. In that year, domestic coal production fell far behind consumption and stockpiles were depleted, leading to electricity rationing. At the same time, to counter the steep increase in international coal prices, the government has pressured miners to sign long-term contracts with power plants and factories at far below market prices.

To fulfil the output targets and delivery contracts, miners have prioritised quantity over quality, resorting to exploiting lower-quality coal reserves to hit the quota, or reducing the processing they usually carry out to increase the quality of their mined coal. This was seen for example in a coal market survey report by analysts at CITIC Futures, who, in February, visited eight coal mines in Inner Mongolia, Shaanxi and Shanxi. The concerns were also reported on by Reuters in June 2022.

Because users are getting worse quality coal, they must burn more of it to run their power plants and factories. The miners are misreporting coal quality to make it seem like production targets are being hit. Therefore, the drop in coal quality is not captured by official statistics.

China’s policymakers have been aware of the coal quality issue and have sought to address it. Last August, the state planning agency NDRC (National Development and Reform Commission) released a notice on ensuring the quality of coal under mid- and long-term contracts for coal used in power generation, in response to a recent “decline in the calorific value of coal purchased by power companies”.

In January 2023, a China Electricity Council official noted a “clear decline in coal quality” as a problem associated with long-term coal contracts, as well as deliveries of coal that don’t meet the quality specified in contracts.

Despite the evidence of a decline in coal quality, official statistics imply no change in the average energy content of coal produced, which is highly unlikely given the major increase in output. This is a further indication that the official statistics are failing to account for the changes in coal quality.

The energy content of coal produced in China according to official statistics can be calculated implicitly from the reported total production of primary energy.

Another indication that not all is well with the domestic coal supply is that coal imports increased 74% in the first two months of 2023, compared with the previous year. After a reported 10.5% increase in domestic production in 2022, there shouldn’t be such ferocious demand for imports.

Why did China permit more than 100 new coal plants, despite record growth in clean energy?

Coal power plant permissions, construction starts and new project announcements accelerated dramatically in 2022, with new permits reaching the highest level since 2015, even as clean energy installations made new records. A total of 106 GW of new coal power projects were permitted, the equivalent of two large plants per week, over four times as much as in 2021.

There are a few drivers behind these investments:

• China saw a rapid increase in electric peak loads in 2021–2022, with the highest recorded momentary load increasing by 230 GW, due to an increase in the prevalence of air conditioners and exceptionally intense heat waves. This is prompting an increase in coal power plant development – a costly and sub-optimal solution, especially in major electricity demand centres and provinces neighbouring them.
• As the prices for imported gas skyrocketed in 2022, the coastal provinces that have relied on gas-fired power plants to cover demand peaks seem to be replacing it or building alternatives.
• Some large wind and solar power developments in remote areas require new thermal power to regulate the voltage and frequency of the grid.

Despite impressive acceleration in clean energy installations, annually added power generation still hasn’t reached the level where it matches growth in electricity demand, resulting in continued growth in demand for power generation from coal. However, the point when all demand growth is covered from clean sources is likely to be reached soon, as the targets for annual wind, and solar installations in particular, are increased.

China’s National Energy Administration said in February 2022 that new coal power plants should not be permitted solely for the purpose of bulk power generation, but only to support grid stability or the integration of renewable energy. While some of the new coal power projects follow this rationale, many don’t. It appears that the statements from the central government encouraging new coal projects have created a self-reinforcing boom dynamic, leading to a lot of projects that cannot be justified from a power system planning perspective.

Currently, local governments are allowed to issue permits with very little, if any, scrutiny or justification, and are rushing to permit as much as possible while this remains the case.

Local governments are always keen on new construction projects as they bring in economic activity and demand for construction materials and services from local state-owned enterprises, while the risks are borne by the central-government-controlled banking system.

New coal power projects don’t seem attractive to developers. However, encouragement from the central government to build more coal-fired capacity creates an expectation that investors will be made whole, for example through cuts to coal prices or increases to electricity tariffs, increasing profitability. At the very least, central-government-controlled banks will absorb any losses.

The government is also preparing capacity payments for coal power plants, and the anticipation of such payments can make investments more attractive.

Yet, the wave of new projects shows a real challenge: while China is making rapid progress in scaling up clean energy, the power system remains dependent on coal power capacity for meeting electricity peak loads and managing the variability of demand and clean power supply.

As electricity demand for cooling increases and China needs to start reducing coal power generation, other solutions to manage the variability of demand and clean power supply are needed. They include increased investment in electricity storage, flexibility, and transmission within grid regions.

The growth in peak loads could be effectively mitigated through strengthened energy efficiency requirements for air-conditioning units and for new buildings, and by introducing a programme of large-scale energy-efficiency improvements for existing buildings.

Once clean energy is growing faster than total electricity demand, there will be no space for power generation from coal to increase

What do China’s conflicting trends mean for emissions?

The government’s focus on energy security means that China will be working simultaneously to: replace coal use in industry and households with electricity use; replace coal power with clean generation; and replace imported coal and gas, and even some imported oil, with domestic coal. This approach explains a lot of the apparent contradictions in promoting both coal and clean energy.

Given the rapid growth of clean energy and expected slower electricity demand growth, the massive additions of coal-fired capacity don’t necessarily mean that China’s coal use or CO2 emissions from the power sector will increase.

China’s emissions-peaking timetable will be dictated by when clean energy growth overtakes total energy demand growth. This may happen in 2024. Clean energy growth would be sufficient this year if it wasn’t for higher growth due to the rebound from China’s zero-covid policy.

Once clean energy is growing faster than total electricity demand, there will be no space for power generation from coal to increase. As more capacity continues to be added, the utilisation rate of China’s vast coal power fleet capacity will decline.

The government’s plan for managing this transition is to relegate coal power to a supporting role, moving from a baseload source to a regulating one that only runs at full steam when wind, solar, hydro and nuclear fall short of meeting electricity demand. In particular, coal power plants will need to ramp generation up and down quickly to respond to changes in generation from variable renewables. This is referred to as “coordinated operation” in the NDRC’s 2023 development plan.

That plan includes studying the introduction of capacity payments, which could be a way of making the transition to a “supporting” role palatable to plant owners – they will make money not just on the electricity that they generate but the regulated capacity that they provide to the system.

But still, China’s targeted rate of emissions reductions after the emission peak is an open question. Adding hundreds of new coal power plants and opening vast amounts of new coal-mining capacity is concerning as it incentivises local governments and companies to continue coal use and avoid a rapid phase-out.

To peak emissions as soon as possible and get on track to reaching carbon neutrality, China will need to keep increasing investments in clean energy, to cover all energy demand growth as quickly as possible and enable the use of fossil fuels to begin falling. To avoid excessive or misplaced investments in coal-fired power, the scrutiny of permits handed out by local governments should be increased and permits that cannot be justified on the basis of serving grid stability, or the integration of renewable energy, should be cancelled. Looking ahead, investments in electricity transmission, more flexible grid operation and storage can help eliminate the need to add more coal power capacity.

This article was originally published on China Dialogue under the Creative Commons BY NC ND licence.

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As concern about climate change increases, a growing number of countries have pledged to reduce carbon emissions by implementing one of the most cost-effective solutions, an emissions trading system (ETS). So far, jurisdictions accounting for 55% of global GDP are using emissions trading.

China’s recently established national ETS has drawn tremendous attention worldwide. It is expected to serve as China’s primary tool to meet its ‘dual carbon’ targets of CO2 peaking before 2030 and carbon neutrality before 2060. The largest ETS globally, it accounts for 40% of China’s emissions and more than 10% of worldwide emissions, with the potential to double in size once industrial sectors are added to the already-covered energy sector. It is also the first nationwide ETS in a large developing country.

How does China’s ETS work?

• China’s national emissions trading system (ETS) gives each covered company the right to emit a certain amount of CO2.
• The amount is based on an emission intensity benchmark and the company’s level of output.
• If a company then emits less than its allocated allowance, it can sell the excess on the market.
• If more, it must purchase allowances or offsets from the market.
• Thus, companies are incentivised to reduce emissions from production activities.

How successful has China’s ETS been to date?

July 2022 saw the first anniversary of trading under China’s ETS, by which time 194 million tonnes of carbon emissions allowances worth over $1 billion had been traded on the market. The first compliance cycle saw over 99% compliance out of 2,162 power companies.

Despite these achievements, there are some key roadblocks. At the top of this list is data quality and integrity.

In July 2021, a power plant in Inner Mongolia was found to have falsified its emissions report by doctoring the date of carbon content testing of the coal it was burning, affecting at least 1 million tonnes of emissions allowances worth $7 million. Additional cases were also found and the Ministry of Ecology and Environment (MEE) issued a notice requiring provincial environment departments to comprehensively examine data quality. If data was found to be false, they should make adjustments and impose sanctions, stated the notice.

Some observers blamed the fraudulent behaviour on a December 2019 announcement of an extremely high default value for the carbon content of coal used in the first compliance cycle. This high value was intended to encourage companies to submit actual testing data rather than using the default. But it came too late to drive more testing for 2019, and instead tempted companies to risk faking test reports.

At a broader level, multiple factors have increased the risk of this type of event.

Firstly, sanctions: the fine for fraud, at $3,000 to $4,500, is insignificant compared to the potential gain from fraud. The boundaries of responsibility for data quality are insufficiently clear among different participants, including companies, verification agencies, testing agencies and consultancies.

Secondly, verification: provincial governments are responsible for selecting verification agencies and tend to prefer local ones. This can rule out more experienced and better qualified agencies from other provinces. Moreover, provincial governments have allocated limited funds for paying for verification, and there are not yet settled qualification requirements for verifiers.

Thirdly, monitoring and reporting: the regulations and guidelines are not sufficiently clear or detailed. For example, in detecting coal carbon content, there appears to be room for tampering with coal samples during collection and preparation.

Data quality and integrity have been high on the government’s agenda. Improved reporting guidelines were published in December 2021 and March 2022; verifiers found guilty of misconduct have been named and shamed; the extremely high default value of carbon content in coal has been replaced; and ETS legislation has been included in this year’s State Council legislative work plan, which would provide the stricter penalties for non-compliance that the ETS needs.

Improving data quality will be the main priority of the MEE in 2022 and 2023, including accelerating further amendments to monitoring, reporting and verification (MRV) guidelines; enhancing emissions data supervision by regular checks at national, provincial and municipal levels; increasing information disclosure; building a system to classify organisations according to their compliance history and supervising them accordingly; and increasing the penalties for violations.

China should look again at best practices in South Korea and the European Union’s ETS

These are big steps in the right direction. However, it appears that China’s priorities on zero-Covid and economic recovery may be complicating efforts to address integrity issues. For example, in view of these priorities, the MEE issued a notice in June 2022 to adjust Measurement, Reporting and Verification (MRV) requirements during the second compliance cycle. It stated that companies with three or more months of carbon content test results per year can use the average of these results to calculate emissions for any months that have no test results, instead of using a high default value under the previous requirements. This adjustment appears to leave room for companies to test during months when they are using coal with a lower carbon content.

A fundamental necessity for China’s National ETS is a robust MRV system. This needs to be supported by efficient IT systems, strong security measures, and effective sanctions for non-compliance. This will promote market participants’ confidence, sectoral expansion, and international support and credibility.

China is making progress in improving the integrity of its MRV system, but more work is urgently needed. The ETS law at the State Council level needs to be adopted; a strong accreditation system for verification agencies needs to be established to ensure consistent and high-quality verification across provinces; fees for verification should be sufficient to do a thorough job; and MRV regulations and guidelines need to be clearer and more detailed.

China should look again at MRV best practices in the European Union’s ETS and the MRV system in the South Korean ETS, the frontrunner in Asia. At the same time, the system’s integrity should be protected from being compromised by other policy drivers.

China is not alone in facing integrity issues in the early stages of an ETS. There were some major fraud cases during the initial phases of the EU ETS. However, lessons were learned quickly and effective controls were established. China must also overcome these challenges quickly to pave the way for its ETS to expand to the industrial sectors, achieve significant greenhouse gas emissions reductions, and realise its potential in helping the country achieve its dual carbon targets cost-effectively.

This article was originally published on China Dialogue under the Creative Commons BY NC ND licence.

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