It is well-known that when rolling out a new and significant policy, Chinese officials are extraordinary cautious. Those who expect radical shifts over night are always left disappointed. So it should come as no surprise that the latest development in Chinese climate policy is small-scale. Nonetheless we shouldn’t underestimate the significance and potential of the recent announcement by officials (made on the first National Low-Carbon Day, June 18th) that China is to implement a trial compulsory carbon-trading scheme. The product of a two-year preparation period itself, the scheme was mooted in late 2011. A national scheme may follow in 2015-2016.
It has been announced that the city of Shenzhen is to host the first trial of a carbon-trading platform, prior to the launch of 6 other platforms later this year. Shenzhen itself has set a target to reduce carbon emissions by one-fifth by the end of 2015. The other areas will be: Beijing, Tianjin, Shanghai, Chongqing, Hubei & Guangdong. At present China is the world’s largest carbon emitter by absolute size (although its per-capita emissions are significantly below those of developed nations).
According to the South China Morning Post firms in the city will receive quotas and be able to sell any unused permits for profit. By 2014 it is estimated at 700 million tonnes of CO2 will fall under the new Chinese permit system, well ahead of the 380 million tonnes covered under similar system in Australia. A Europe-wide system currently covers 2.1 billion tonnes. The trial system will therefore form the worlds second largest carbon trading scheme, despite only covering a fraction of total emissions.
The Government has committed itself to reducing CO2 emissions per unit of GDP by 40% by 2020 in comparison with 2005 levels.
The Climate Institute (Australia) has heaped praise on the scheme, saying that current Chinese policies are likely to lead towards the single largest absolute reduction of carbon emissions in history. In its report ‘Carbon Markets and Climate Policy in China: China’s Pursuit of a Clean Energy Future‘ it states that:
“China has, for self-interested reasons, moved to slow the growth rate of its greenhouse emissions. China has reduced its energy intensity, become a world leader in renewable energy, and is rapidly establishing carbon trading systems. These actions not only have positive impact on the climate, they also drive economic growth, reduce fuel dependency and create export opportunities.”
Although often criticized for its carbon output, China has invested significantly in low-carbon technologies in the past 10 years. Renewable energies currently account for 19% of Chinese energy production. Renewable energies including nuclear accounted for 90% of generation capacity growth last year.
China is the world’s single biggest producer of solar panels, although a disagreement between the EU and China concerning imports has resulted in a referral to the World Trade Organisation. Levies of 11.8% were recently introduced in order to prevent Chinese panels being ‘dumped’ into the EU market, provoking the early stages of a potential trade war between the two nations and potentially threatening the stratospheric rise of the Chinese low-carbon market.
- China’s smog levels get the cartoon treatment (chinadailymail.com)
- Explainer: China carbon trading schemes kick off (reneweconomy.com.au)
- AUDIO: China starts carbon trading scheme (nuclear-news.net)
- World’s largest carbon emitter: China launches its first carbon trading scheme (thenewstribe.com)
- China Launches its First Carbon Trading Scheme (thejakartaglobe.com)
- Glimmer of hope for carbon markets (eco-business.com)
- China in carbon trading experiment (arunbabyveranakunnel.wordpress.com)
- China unveils details of pilot carbon-trading programme (guardian.co.uk)
- Carbon Trading with Chinese Characteristics (scientificamerican.com)
- China announces carbon trading and more aggressive emission targets for peak emissions by 2025 will mean more nuclear and hydro power (nextbigfuture.com)
- China is testing out cap-and-trade – but will it actually work? (washingtonpost.com)