According to new reports just released China, the world’s biggest emitter of greenhouse gases, could significantly cut the cost of getting to its emissions target with a national Emissions Trading Scheme (ETS).
The reports say achieving China’s emissions target could be cut by a fifth if it moved away from provincial targets to a national ETS.
Reuters Point Carbon reports the central government has pledged to reduce the nation’s carbon emissions per unit of GDP by 17 per cent by 2015 compared to 2010 levels, and has distributed targets to each province ranging from 10 to 19.5 per cent.
However, the provincial approach means China will miss out on low-cost emission reduction potential in some of its less-developed provinces, said a report published in Energy Economics journal by researchers at the United States’ Massachusetts Institute of Technology and China’s Tsinghua University.
“A national target creates incentives to make reductions where they are the cheapest,” said Zhang Da, one of the authors.
The report said some less-developed provinces such as Ningxia and Qinghai in the west and Guizhou and Hainan in southern China had large potential for low-cost emission cuts that would be left untapped because those regions had been given modest targets by the central government.
Meanwhile, big coal-producing regions such as Shanxi, and areas that had already achieved some CO2 cuts such as Beijing and Tianjin would be facing severe costs because their potential to slash emissions was limited.
A national carbon market would allow developed regions to save money by buying emission cuts in poorer areas, resulting in a 20 per cent cost saving, the report said, without giving absolute figures.
Reuters Point Carbon reports with a national emissions market, the overall price on carbon in China to meet the 17-per cent reduction target would be US$38.50 a tonne.
While under the current provincial approach, costs would range from US$74 in eastern Shandong province to as little as US$20 in Qinghai, the report said.
“We hope that our research will help policymakers understand the distribution of the burden of alternative policy options, and help them to determine the most cost effective method of reducing CO”,” Mr Zhang said.
China is launching seven regional carbon markets this year and next and has begun work to design a national scheme, although observers say a nationwide market is unlikely to emerge until 2020.
Meanwhile, the National Development and Reform Commission (NDRC) released technical guidelines for measuring, reporting and verifying emissions for ten sectors across the economy, including power generation and manufacturing.
The guidelines would be used for reference purposes in a nationwide carbon trading mechanism, the NDRC said.
In 2006, China surpassed the US to become the world’s biggest emitter of greenhouse gas emissions, blamed by scientists for causing dangerous climate change.
The government has said it will reduce the emissions intensity in the economy to 40-45 per cent below 2005 levels by 2020, but the nation’s rapid economic growth means its emissions in absolute terms continue to grow.
A report released by the Netherlands Environmental Assessment Agency said China accounted for 29 per cent of global CO2 emissions in 2012, although its annual growth rate slowed to three per cent, compared to 10 per cent in recent years.
