Impacts of China's emissions trading schemes on deployment of power generation with carbon capture and storage

Summary: Fulfilling the ultimate goal of the Paris Agreement on climate change—keeping global warming well below two degrees Celsius, if not 1.5°C—will be impossible without dramatic action from the world’s largest emitter of greenhouse gases, China. Toward that end, China began developing in 2017 an emissions trading scheme (ETS), a national carbon dioxide market designed to enable the country to meet its initial Paris pledge with the greatest efficiency and at the lowest possible cost. China’s pledge, or Nationally Determined Contribution (NDC), is to reduce its CO₂ intensity of GDP (emissions produced per unit of economic activity) by 60–65% in 2030 relative to 2005, and to peak CO₂ emissions around 2030.

When it’s rolled out, China’s carbon market will initially cover the electric power sector (which currently produces more than three billion tons of CO₂) and likely set CO₂ emissions intensity targets (e.g. grams of CO₂ per kilowatt hour) to ensure that its short-term NDC is fulfilled. But to help the world achieve the long-term 2°C and 1.5°C Paris goals, China will need to continually decrease these targets over the course of the century.

A new Joint Program-led study of China’s long-term power generation mix under the nation’s ETS projects that until 2065, renewable energy sources will likely expand to meet these targets; after that, carbon capture and storage (CCS) could be deployed to meet the more stringent targets that follow.