| Flexible measures (banking and borrowing, credit mechanisms or offsets and linking) | Banking was not permitted between phases PI and PII. It was permitted from PII to PIII, and is going on Borrowing: Not permitted Linking: Norway, Iceland, and Liechtenstein linked in 2008. Negotiations with Australia launched in 2012 but repealed in 2014, with Switzerland under discussion Offsets: Quantity restrictions: in PI determined by member states. Subsequently, offsets limited to 50% of compliance 2008-2020. Quality restrictions: credits from Kyoto Protocol mechanisms (CDM and JI) permitted from PII.1 | Banking: Permitted between years in pilot period, except in Hubei province. Borrowing: Prohibited. Offsets: Qualitative restrictions: No international credits accepted. All ETSs accept domestic credits, with Beijing requiring 50% and Guangdong 70%, of credits be sourced locally, and Chongqing requiring credits be sourced through their voluntary or forest schemes. Quantitative restrictions: 5% - 10% of compliance can be met by credits. Linking: Efforts will be made to explore options for linking with other markets in the Stability Phase (post-2020). |
| Measures to manage market supply & price | Back-loading of allowances: To deal with structural surplus, auctioning of 900 m allowances was postponed from 2014-2016 until 2019-2020. Market stability reserve: To manage a structural surplus, from 2019, if surplus allowances are above a maximum threshold, they will be placed in a reserve and only released when surplus drops below minimum threshold. Back-loaded allowances will be placed in the reserve. Offset restrictions: Due to flooding of the market, JI offsets delivered after 2012 were restricted. | Strategic reserve: Shenzhen, Guangdong, and Hubei have established a strategic reserve for price management. Such a reserve is also intended in Shanghai, Beijing, Chongqing, and Tianjin have not yet declared clear rules for price management. Auction and buy-back of allowances: Beijing and Tianjin intend to use auctioning and buy-back of allowances to control supply and prices. |