The role of China’s ETS in the decarbonization of the electricity sector

This IEA report explores how China’s Emissions Trading Scheme, due to come into operation in 2021, can drive reductions in emissions from electricity generation and support the transformation of the energy sector to meet its climate goals. . This study analyzes three scenarios to assess the potential impacts of the ETS on China’s electricity sector: the no carbon pricing scenario, the free allocation of production-based emission rights for electricity generation, and the gradual introduction in 2025 of the emission rights auction, moderately reducing the proportion of freely allocated emission rights in the system.