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4.63. In December 2017, China launched the construction plan for the National Carbon Emission Right Trading Market (Power Generation Industry) to start building its National Carbon Emission Trading System. According to the plan, the power generation industry will be the first to carry out transactions on the national carbon market, which will be gradually expanded to other industries. In 2018, the work of responding to climate change was adjusted and incorporated into the mandates of the newly formed Ministry of Ecology and Environment.

4.64. In December 2020, China issued the Regulations on Carbon Emission Trading (Trial) and the Implementation Plan on National Carbon Emission Trading Quota Determination and Distribution for 2019-2020 (Power Generation Industry). The Regulations provided a list of key emission units in the power generation industry that are included in the quota management, as well as the specific requirements for quota allocation and compliance, and officially launched the first compliance cycle of the national carbon market.

4.65. Other measures regarding the promotion of clean energy included the Notice on Establishing and Improving the Safeguard Mechanism of Renewable Energy Power Consumption, which was jointly adopted on 10 May 2019 by the NEA and the NDRC. It provides a general framework for, inter alia, setting renewable electricity consumption quotas as a share of total power consumption in each province, defining quota setting methods, and monitoring quota trading. The authorities note that a number of periodic monitoring and evaluation reports have been issued to guide provincial authorities in formulating their local renewable energy power consumption plans. The same efforts will continue in 2021, as the authorities are calculating the 2021 consumption quota, according to the broad national objective of achieving carbon neutrality by 2060.

4.66. On 1 January 2018, China implemented a new environmental tax policy aimed at promoting environmental protection and reducing pollution.

4.68. Coal, an abundant and relatively cheap resource in China, continues to represent a large part of the country's primary energy, and it is also the main cause of air pollution. (...).

4.69. The authorities note that, in recent years, China implemented policy measures to strictly control the new capacity of coal-fired power. In 2019, China's coal-fired power installed capacity stood at 1.04 TW. Its growth rate dropped by 30% on average over the period 2016-20 compared with the period 2011-15. (...) The authorities also note that China's new power demand in recent years was mainly supplied through renewable energy.

4.80. Under China's energy development plan, the use of natural gas is to be expanded, as it is considered clean energy. In 2019, gas accounted for 8.1% of energy consumption, up from 5.8% in 2015. In addition to industrial fuel and power generation, gas is mainly used for urban heating and cooking, transport, and the manufacture of raw chemical materials and chemical products.

4.82. By end-2019, China's installed power generation capacity was 2.01 billion kW (up from 1.9 billion kW at end-2018). Thermal power, hydropower, nuclear power, wind power, and solar power accounted for 1.19 billion kW, 358 million kW, 49 million kW, 210 million kW, and 200 million kW, respectively. At end-2018, these figures were 1.04 billion kW, 352 million kW, 45 million kW, 180 million kW, and 170 million kW, respectively.

4.84. The Administration Measures on Power Grid Enterprises' Full Purchase of Electricity Generated by Renewable Energy provide that on-grid electricity generated by renewable energy power plants must be purchased by distributors (regional monopolies) within the coverage of their power grids. Currently, Chinese grid companies include State Grid Corporation, China Southern Power Grid, Inner and Mongolia Power (Group) Co., Ltd., as well as a number of provincial grid enterprises.

4.87. (...) Private investment, including foreign investment, is encouraged in the development of the renewable energy sector. In the new 36-Clause on Private Investment (State Council Circular 2010/13), domestic private capital is "encouraged" to build new energy sectors such as wind, solar, geothermal, and biomass power. Electricity generation from wind, solar, or biomass power is also listed in the "encouraged" section of the Catalogue of Encouraged Industries for Foreign Investment (2020 edition). China also promotes electricity generation with nuclear energy; as in the case of renewable energy, FDI is encouraged.