Considerations for Chinese power industry to participate in carbon market

In 2017, China started its national emission trading system. Power industry has been covered as a critical member. During the carbon market construction, the new power market reform has started in 2015 in China. It is crucial for power industry to simultaneously meet the requirements from both power market reform and emissions reduction. This paper puts forward four key considerations for power industry to participate the emission trading system in China, including cap setting approach, the quota allocation approach, coordination mechanism for carbon trading and power trading, and the carbon cost transmission mechanism.