Public Disclosure Copy The World Bank Implementation Status & Results Report China Partnership for Market Readiness (P145586) China Partnership for Market Readiness (P145586) EAST ASIA AND PACIFIC | China | Environment & Natural Resources Global Practice | Recipient Executed Activities | Investment Project Financing | FY 2014 | Seq No: 7 | ARCHIVED on 08-Nov-2017 | ISR29932 | Implementing Agencies: People's Republic of China, National Center for Climate Change Strategy and International Cooperation (NCSC) Key Dates Key Project Dates Bank Approval Date:16-Jun-2014 Effectiveness Date:16-Feb-2015 Planned Mid Term Review Date:23-Jan-2017 Actual Mid-Term Review Date:17-Jan-2017 Original Closing Date:30-Jun-2018 Revised Closing Date:30-Jun-2018 Project Development Objectives Project Development Objective (from Project Appraisal Document) The Project Development Objective is to enable China to design a national carbon emissions trading scheme. Has the Project Development Objective been changed since Board Approval of the Project Objective? No PHRPDODEL Components Name Enable design of key building blocks for a national carbon emissions trading scheme (ETS):(Cost $6.50 M) China PMR synthesis report, consultations and project management:(Cost $2.10 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO  Satisfactory  Satisfactory Overall Implementation Progress (IP)  Satisfactory  Moderately Satisfactory Overall Risk Rating  Moderate  Moderate Implementation Status and Key Decisions Project implementation is largely on track in terms of work progress, and disbursement is expected to increase sharply as final outputs are delivered in 11/8/2017 Page 1 of 7 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report China Partnership for Market Readiness (P145586) early 2018. The project's research activities have supported the delivery of a number of important policies that are laying the critical foundation of China’s national carbon emissions trading scheme (ETS), including : (1) the national allowance allocation methodologies, which have been approved by the State Council, (2) the general plan for the ETS, which was recently sent to the State Council, and (3) the National Carbon Emissions Trading Supervision and Management Methodology, which is in final draft. Once promulgated by the State Council, legislation based on these inputs will provide the national-level regulatory guidance and policy framework for the national ETS. In addition, the Partnership for Market Readiness (PMR) Multi-donor Trust Fund has approved an additional US$2 million (approved by the PMR in March) for the project. The additional funding will support new activities to enhance the emission benchmarks for the eight sectors included under the ETS, as well as to develop the financial market and regulations to support emissions trading. These activities are complementary to the CPMR Project, especially to enhance implementation of the regulatory framework. The project is currently being restructured to add the new financing and activities to the project, and to extend the closing date by 18 months. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance  --  Low  Low Macroeconomic  --  Low  Low Sector Strategies and Policies  --  Moderate  Moderate Technical Design of Project or Program  --  Substantial  Substantial Institutional Capacity for Implementation and Sustainability  --  Moderate  Moderate Fiduciary  --  Moderate  Moderate Environment and Social  --  Low  Low Stakeholders  --  Moderate  Moderate Other  --  --  -- Overall  --  Moderate  Moderate Results Project Development Objective Indicators PHINDPDOTBL  Submission of a proposal for the national ETS design (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Submission of Value N/A Not yet due Under Implementation Proposal Date 01-Apr-2014 07-Dec-2016 16-Oct-2017 31-Mar-2018 Comments Final draft proposal has been received. Final proposal on schedule for March 2018. 11/8/2017 Page 2 of 7 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report China Partnership for Market Readiness (P145586) Overall Comments The original target is for submission of a national ETS proposal by the National Development and Reform Commission (NDRC), Department of Climate Change, to the vice chairman of the NDRC by March 2018. No specific date has been announced for the launch of the ETS -- the official date is still 2017 -- but it is expected that once launched it will be several years before the system is fully operating in all eight sectors. The project’s interim outputs have fed directly into the expedited preparation of the ETS, including the draft regulation for “National Carbon Emissions Trading Supervision and Management Methods” that entered the legislative approval process at the State Council in 2016. Intermediate Results Indicators PHINDIRITBL  Proposal on methodologies of scope, coverage, cap setting and allocation (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value N/A Under implementation Under implementation Report Date 01-Apr-2014 07-Dec-2016 16-Oct-2017 31-Mar-2018 Comments While the final proposal is still under development, several critical elements have been completed and analytical work continues to be under implementation. This work had been accelerated to support the earlier target of completion (and launch) of the ETS. Component 1 delivered critical interim outputs that directly supported policy development on the identification of scope and allocation methodologies. Specifically, sub-component 1.1 provided the analytical basis and recommendations on the initial sectors to be included in the ETS. The Notice on Key Tasks to Start the National Carbon Emissions Trading Scheme (No.57 Document of NDRC) was issued in 2016. The policy confirmed the national launch plan of the ETS and the identification of the eight key sectors to be covered (petrochemicals, chemicals, iron and steel, power generation, building materials, paper-making, nonferrous metals, and aviation). Subcomponent 1.1 also delivered critical data and the analytical basis for disaggregating the 13th Five-Year Plan (FYP) national GHG control targets for the provinces. The State Council approved and issued the Disaggregation Plan of China’s National CO2 Emission Target in ‘Notice of the State Council on Issuing the Work Plan for Greenhouse Gas Emission Control during the 13th Five-Year Plan Period’. The second draft report was received and discussed on July 4, 2017. 11/8/2017 Page 3 of 7 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report China Partnership for Market Readiness (P145586) PHINDIRITBL  Proposal on legal framework and oversight system (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value N/A Under implementation Under implementation Report Date 01-Apr-2014 07-Dec-2016 16-Oct-2017 31-Mar-2018 Comments A comprehensive proposal on legal framework consists of a large set of regulations. The critical draft regulation has been delivered, while research work to support development of the supplementary regulations continues. Sub-component 1.2 of the project provided direct technical inputs to the drafting of the National Carbon Emissions Trading Supervision and Management Methods. The Draft has entered the legislative process of the State Council. Once promulgated by the State Council, this legislation would provide the national-level regulatory guidance and policy framework for the national ETS. Further supplementary regulations are under development by the NDRC with research support from sub-component 1.2. A second draft report was received and discussed on July 4, 2017. PHINDIRITBL  Proposal of MRV system for the national ETS (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value N/A Under implementation. Under implementation Report Date 01-Apr-2014 07-Dec-2016 16-Oct-2017 31-Mar-2018 Comments The monitoring, reporting and verification (MRV) system builds on a comprehensive set of technical guidelines and standards. Sub- component 1.3 supported research work for the development of guidelines, standardized reporting and verification protocols, and details on the criteria and eligibility of third-party verification entities. These guidelines have been issued by the NDRC and provide the technical foundations of the overall MRV system for the ETS. Research work continues for the finalization of several supplementary technical guidelines to be issued within 2017. The second draft report was received and discussed on July 4, 2017. PHINDIRITBL  Proposal to improve the ETS registry (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value N/A Under implementation. Under implementation. Report Date 01-Apr-2014 07-Dec-2016 16-Oct-2017 31-Mar-2018 Comments As additional details of the ETS design emerge, the ETS registry system needs to be updated and modified continuously to address the 11/8/2017 Page 4 of 7 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report China Partnership for Market Readiness (P145586) latest user requirements. The improvement of the ETS registry is therefore a living process. To date, two versions of the ETS registry have been done. Work is under implementation to prepare for another round of system updates prior to the national launch. A second draft report was received and discussed on July 4, 2017. PHINDIRITBL  Thematic report on SOEs (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value N/A Under implementation. Under implementation. Report Date 01-Apr-2014 07-Dec-2016 16-Oct-2017 31-Mar-2018 Comments Work continues to finalize the thematic report. The consultant team has delivered research report of the Study on Issues Related to the Participation of Central SOEs in the National ETS (final draft) and three major capacity building activities for the central SOEs, including carbon trading simulations. A second draft report was received and discussed on July 4, 2017. PHINDIRITBL  Thematic report on Power Sector (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value N/A Under implementation. Under implementation Report Date 01-Apr-2014 07-Dec-2016 16-Oct-2017 31-Mar-2018 Comments A detailed draft report for the power sector was delivered and discussed at a workshop in the summer. Following inputs from the expert panel, further work on the power sector report has been carried out. The final report is on schedule top be delivered in early 2018. 11/8/2017 Page 5 of 7 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report China Partnership for Market Readiness (P145586) PHINDIRITBL  Synthesis report (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Synthesis Value N/A Not yet due Not yet due Report Date 01-Apr-2014 07-Dec-2016 16-Oct-2017 31-Mar-2018 Comments The synthesis report will draw on all of the intermediate reports of the project. It is to provide an overview of the technical rationales behind of the design of the national ETS framework. It will be prepared after the final reports from the other components are delivered. The synthesis report is intended to provide policy transparency to stakeholders and general public. According to the annual working plan, PMO had planned to start the work on the synthesis report in July or August, however, work is now pending the resolution of the Designated Account issue given the inability to make payments. Overall Comments Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed Disbursed P145586 TF-17222 Effective USD 8.00 8.00 0.00 3.46 4.54 43% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P145586 TF-17222 Effective 23-Dec-2014 23-Dec-2014 16-Feb-2015 30-Jun-2018 30-Jun-2018 Cumulative Disbursements 11/8/2017 Page 6 of 7 Public Disclosure Copy Public Disclosure Copy The World Bank Implementation Status & Results Report China Partnership for Market Readiness (P145586) Restructuring History There has been no restructuring to date. Related Project(s) There are no related projects. 11/8/2017 Page 7 of 7 Public Disclosure Copy