China pilot carbon trading scheme to boost global trade
26/07/2010 by RISK.NET
By Kate Holliday
China may press ahead with a new carbon trading scheme, according to Chinese media reports, raising hopes the move will provide a welcome boost to struggling international efforts to expand emissions trading.
“Especially in the current circumstances, with limited progress in countries like the US and Australia, an emissions trading scheme (ETS) in China would be extremely positive for everybody hoping for a price on carbon emissions across the world,” says Stig Schjølset, senior analyst at carbon market analysis firm Point Carbon.
China Daily, the state-owned daily newspaper, reported that the decision to go ahead with a pilot scheme was made at a closed-door meeting chaired by Xie Zhenhua, deputy director of the National Development and Reform Commission (NDRC) and attended by officials from related ministries, enterprises, environmental exchanges and think tanks.
The newspaper said China had relied on administrative tools to realise its 20% energy intensity reduction target between 2006 and 2010. But with rising energy demand, the administrative procedures have been deemed too expensive for the country to meet targets to cut carbon emissions per unit of economic growth by 40% to 45% by 2020 from 2005 levels.
Current proposals include a choice between setting an absolute cap on carbon dioxide emissions in a certain area or industry, or a second option of converting the country’s carbon intensity target into carbon-related allowances for trading schemes.
However, analysts say it is still not certain whether the scheme will be implemented or not. “It remains to be seen whether the pilot program actually will be implemented, and if so, what kind of system will emerge,” says Schjølset. “It will make a huge difference if it’s a scheme with absolute caps rather than intensity-based targets, and it will also be interesting to see which sectors (or regions) will be covered.”
“Obviously it makes for good headlines, but I’d be wary of believing it means there’s going to be an absolute domestic cap just yet,” says Alessandro Vitelli, director of strategy and information at carbon advisory firm IDEACarbon. “China still asserts its right to pursue economic development and poverty eradication above all, and has rejected taking on any mandatory carbon cap as part of an international agreement. This does obviously give them wriggle room to set purely voluntary, domestic caps such as particular geographical areas or a particular sector, but the devil is in the detail.”
China ratified the Kyoto Protocol – an international climate change agreement – in 1997, but as a developing country it does not shoulder legal responsibility to reduce its carbon emissions.
Copyright 2010 Incisive Media Investments Ltd
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