China, the world’s biggest polluter, has unveiled plans for a national carbon market likely to become the world’s largest exchange for emissions credits.
Environmentalists praised the move as an important step in the battle against climate change as China burns more coal than any other country, giving it the ignominious title of top greenhouse gas emitter.
The French newsagency AF? reports although the long-delayed emissions exchange scheme will initially cover just the power generation sector, it is expected to surpass the European Union’s carbon market, currently the world’s biggest.
“The purpose of this program is to reduce greenhouse gas emissions,” said Zhang Yong, vice chairman of China’s National Development and Reform Commission (NDRC).
The country is the largest investor in renewable energy but has faced an uphill battle transitioning from coal, which is used to generate about three-quarters of its power according to the International Energy Agency (IEA).
China is seen as a potential leader in the fight against climate change after the United States, under President Donald Trump, retreated from the United Nations sponsored Paris Agreement on climate change.
“The world has never before seen a climate program on this scale,” said Fred Krupp, president of the Environmental Defence Fund (EDF), which provided technical assistance to pilot carbon trading programs in China.
“China has stepped up its climate leadership dramatically in recent years, and is now increasingly seen as filling the leadership void left by the US,” Mr Krupp said in a statement.
AFP reports the emission exchange outlined by the NDRC may slowly change the calculus for utilities and other coal-burners.
“We aim to reduce emissions through market-based mechanisms,” Mr Zhang said, adding that the immediate focus for establishing the carbon credits exchange was on the power generation industry.
“Some 1700 electric companies emitted more than three billion tonnes of carbon,” Mr Zhang said.
“This is where we will get to it,” he said, without giving more details, including the program’s timeline.
The project expands on the lessons learned from seven provincial and city carbon exchanges.
“With just emissions trading in the power generation industry, the scale will exceed that of every country in the world,” said Li Gao, an official in the commission’s climate change department.
Coal generates most of the nation’s power but the country has moved rapidly this winter to limit the dirty fuel’s use in northern China, though it had to reauthorise it in some areas due to natural gas shortages.
French power generator EDF said China’s power sector represented 39 per cent of the nation’s total emissions.
The EU Emissions Trading System (ETS) puts a cap on the amount of carbon dioxide that can be emitted by large factories and other companies.
The firms can trade in quotas of these emissions, the idea being to provide a carrot to improve energy efficiency or switch to cleaner sources so that they keep within the ceiling.
AFP reports the EU last month agreed to reform the ETS as critics said the market, which covers about 40 per cent of Europe’s industrial emissions, has proven ineffective.
Carbon allowances were too generous, resulting in a carbon price too low to encourage savings.
Carbon Market Watch, which scrutinises such trading schemes, said a “number of uncertainties remain” around China’s plan, including concerns over the quality of emissions data and the measuring, verification and reporting systems in many Chinese provinces.
Nevertheless, Femke de Jong, policy director at Carbon Market Watch, said: “The launch of the Chinese carbon market shows that there is increased commitment around the world to price pollution and direct investments into clean technologies.”
One Response
Please check your data on the % of electricity generated from coal.
It is generally shown to be a declining % and nearer to 50% than 75% !