On 25 August 2021, the municipal government in China’s city of Shenyang, the capital city of the northeast Shenyang province, issued the Measures for the Management of Carbon Emissions Trading in Shenyang. Taking effect on 1 September 2021, it provides a general policy framework and legal basis for its regional ETS.

On the same day, the municipal government also organized a press conference. The locally initiated ETS has undergone several years of preparation and is expected to be launched in the coming months. However, it faces uncertainties given the operational launch of the national ETS.

The exact launch date of the Shenyang ETS is not yet specified. How it will co-exist with the national ETS is also unclear. China’s national ETS started its operational phase beginning this year, covering emissions from 2019 and 2020 for the electricity sector. The policy documents underpinning the national ETS, including the most recent draft of the national ETS legislation, call for existing ETS pilots to be gradually integrated into the national ETS, which is expected to expand to industrial sectors such as steel and aluminum in the coming years. This integration for electricity sectors covered under regional pilots is already underway. At a press conference in July 2021, the national Ministry of Ecology and Environment also clearly stated that they do not support any new regional ETS pilots to be set up after the start of the national ETS.

Guest post from ICAP