China Has A Lot to Do to Realize Carbon Trading Nationwide
   2013-07-01 14:29:48      Web Editor: Xu Fei


A high-level meeting on the 6th World Economic and Environmental Conference was held in Beijing on Sunday, June 30, 2013. The roundtable meeting discloses that the 6th World Economic and Environmental Conference will be held in the latter half of this year under the theme "on the way to green and low carbon to deepen industrial reform and seek harmonious development." [Photo:]

The city of Shenzhen, in south China's Guangdong Province, has launched a carbon trading scheme, to become China's first market for compulsory carbon trading.

Energy consumption and environmental experts are praising the move as a positive sign that the government is changing its ways and reducing carbon dioxide emissions.

However, they also point out that the government still has a lot to do to realize carbon trading nationwide.

The Shenzhen pilot scheme involves 635 local companies which account for 26 percent of the city's gross domestic product and 38 percent of its CO2 emissions, or about 30 million tonnes -- a tiny amount compared to the 8 billion tonnes China emitted in 2012.

Liu Yanhua, Counselor of the State Council and Former Chinese Vice Minister of Science and Technology, says production enterprises, a major contributor to such emissions, are expected to play an active role should China develop its low-carbon technology, by applying this carbon trading pilot scheme across the nation.

"70 percent of China's energy consumption derives from production enterprises, which is an important factor in world energy-related CO2 emissions. And the remaining 30 percent of energy use and emissions takes place in homes. Developing countries usually find the reverse situation. If China wants low-carbon development, the nation needs to transform its model of development. Enterprises would undoubtedly play a big role in the transformation as a result of 70 percent of emissions being caused by the production."

Carbon markets allow companies to buy permits to emit carbon dioxide from those that burn less fossil fuels. They thus help set a price on emissions, a mechanism that aims to encourage companies to reduce such pollution and invest in cleaner technologies.

Shenzhen is one of the seven cities that were designated as a pilot area for carbon emission trading together with Tianjin, Shanghai, Chongqing and Beijing municipalities and the provinces of Guangdong and Hubei.

Rights for 100 million tons of carbon emission have been allocated to 635 enterprises over the past three years, based on their previous emission and added industrial values.

Zhou Jian, an expert with Tsinghua University's Institute of Energy, Environment and Economy, believes that this pioneering pursuit of carbon trading development in Shenzhen indicates government progress in reducing emissions.

"Shenzhen is the country's first market for the compulsory carbon trading of seven pilot cities and provinces. This fact also demonstrates a change in the Chinese government's attitude in energy conservation and emissions' reduction, from the heavy reliance on compulsory and administrative means to adopt market mechanisms."

China's carbon-trading plans are modeled on similar programs now underway in Europe, Australia, California, New England and other large economies.

Zhou Jian believes that the advanced European and US markets would first make a law that stipulate the cap for carbon emissions and then allocate a quota of emissions to individual enterprises, however the Chinese government has failed to put such a law in place yet.

Zhou also added another problem has to be addressed in realizing carbon trading nationwide.

"One of the difficulties lies in the establishment of a control system to calculate, monitor and examine carbon emissions in China. If the quota of carbon emissions is allocated to each individual enterprise, the basic and micro-statistics regarding their respective consumption of carbon and related emissions are strictly necessary. But there is no such content in China's current accounting system."

There are also concerns in China about what will happen to the price of credits when companies start to trade them. Some say that the price of these credits will rise as China looks to cut pollution levels, which may spark speculative trading.

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