What Is an Emissions Trading System?

The carbon emissions trading system, or ETS for short, is a trading market that uses emissions rights as a commodity circulation based on greenhouse gas emission reductions. The European Union established the ETS in 2005. During the "Twelfth Five-Year Plan" period, China strengthened its control of greenhouse gas emissions and established its own carbon emissions trading system (ETS).

Carbon trading system

The carbon emissions trading system was negotiated by the United Nations Intergovernmental Panel on Climate Change, and the United Nations Framework Convention on Climate Change was adopted on May 9, 1992. The first additional agreement to the Convention was adopted in December 1997 in Kyoto, Japan, the Kyoto Protocol (the "Protocol"). The "Protocol" treats the market mechanism as a new way to solve the problem of reducing greenhouse gas emissions represented by carbon dioxide, that is, using carbon dioxide emission rights as a commodity, thereby forming a transaction of carbon dioxide emission rights, referred to

Establishing ETS helps to use market mechanisms to allocate resources and control more effectively

European Union Greenhouse Gas Emission Trading Scheme (EU ETS)
UK Emissions Trading Group (ETG)
Chicago Climate Exchange (CCX)
Australia's National Trust of Australia (NSW)

Since the United States and Australia are not members of the Kyoto Protocol, only the EU Emission Trading System and the UK Emission Trading System are international exchanges. The two exchanges in the United States and Australia have only symbolic significance.

The EU requires Chinese airlines to submit a big limit on carbon emissions data for the carbon emissions trading system (ETS, commonly known as carbon tax), but China has not compromised. According to the directive of the Civil Aviation Administration of China, all transportation airlines in China are prohibited from participating in the EU emissions trading system without the approval of relevant government departments, and transportation airlines are prohibited from using this as a reason to increase freight rates or increase fees.

The impact of EU ETS on China's civil aviation is very large. The mandatory carbon tax will increase the cost of aviation operations, and airlines will be forced to transfer costs to passengers, which will not only affect the development of China s civil aviation industry, but also seriously affect the EU aviation industry.
I believe that in the face of EU pressure, Chinese airlines will still abide by national regulations. Depending on the domestic policies of France, Germany, Belgium and other EU member states, if they do not submit carbon emissions data on time, each Chinese airline will face fines of varying amounts. The maximum amount will reach about 500,000 euros. Under the influence of the European Union's sovereign debt crisis, the weak economic growth of the United States, and the decline of the Asian economy, the current operating situation of China's civil aviation industry may be even more severe than that of the 2008 international financial crisis.
ICAO is developing unified global market measures for the air transport industry, including the following four aspects: mandatory offset of aviation carbon emissions, mandatory offset with a certain income-generating mechanism, global carbon trading scheme, and carbon based on "basic and quota" Emission Trading Scheme. These mechanisms are proposed by the expert group and then reviewed by the ICAO Council, and a final resolution will be reached at the ICAO Assembly in autumn 2013.