China to launch pilot carbon market in Shenzhen
China’s economic growth has come on the back of unparalleled coal use, unbreathable air and the unenviable title of being the world’s biggest greenhouse gas emitter.
So as it prepares to launch its first pilot carbon market on Tuesday, there is intense speculation about the scheme’s likely impact, both domestically and whether it boosts China’s support for a binding global treaty to lower carbon emissions.
The pilot is in the economically thrusting city of Shenzhen, across the border from Hong Kong, one of seven testing grounds Beijing picked in 2011 to try out emissions trading before deciding whether to launch a national system from 2015.
Carbon markets, also known as emissions trading or cap and trade schemes, have become one of the most widely used ways of putting a price on the carbon dioxide emissions produced by burning fossil fuels such as coal and gas: emissions that scientists say are driving potentially dangerous global warming.
Such markets encourage factories and other major carbon producers to curb pollution by capping the volume of emissions allowed and forcing companies to surrender permits to cover their annual emissions.
Cleaner companies can then sell excess permits to dirtier ones, thus setting a market price aimed at reducing overall emissions and driving more investment in greener technologies.
A high-profile official launch is expected in Shenzhen as China tries to show that it is serious about tackling its pollution and advancing international efforts to address global warming.
But before the Shenzhen market even starts, analysts say it risks suffering the oversupply problems that have dogged the world’s biggest carbon market, the EU’s eight-year-old emissions trading system, despite attempts to design a more foolproof system. Many aspects of the new market remain unclear, including its precise burden on companies.
“At the moment we know 635 companies will be covered by the Shenzhen scheme,” said Hongliang Chai of Thomson Reuters Point Carbon, a consultancy, pointing out that their combined emissions add up to just over a third of all Shenzhen’s emissions in 2010. “But we don’t officially know exactly which companies will be covered.
Still, the fact that the world’s second-biggest economy has come this far is “absolutely remarkable”, said Jeff Swartz, director of international policy at the International Emissions Trading Association.
“China has embraced the concept of emissions trading and has done so at a very quick pace,” he said, adding Shenzhen’s proximity to heavily polluted Hong Kong would probably make people ask: “Why isn’t Hong Kong doing this?”
Mr Swartz thinks the number of senior Shenzhen officials eager to make the scheme a success bodes well for the other six pilot schemes due to be rolled out in Beijing, Shanghai, Tianjin and Chongqing, and the provinces of Guangdong and Hubei.
China, like most other emerging economies, has long resisted any suggestion that it should jeopardise economic progress by cutting emissions to address a problem such as climate change that is blamed on wealthier, developed nations. The launch comes as China’s economic growth is slowing, which could add to the pressure on the fledgling scheme.
That is why the world is watching the progress of the Chinese pilot carbon markets so closely, said Anthony Hobley, president of the Climate Markets and Investment Association.
“If they are able to deliver cost effective reductions in emissions without detrimental impacts on the economy then they may well mark the future for China’s approach to mitigating climate change and in turn its attitude to an international agreement in 2015,” Mr Hobley said.
“Let’s not forget that the history of successful international agreements is based on countries formalising what they are actually doing domestically.”
Climate campaigners hope a new global treaty to reduce emissions will be agreed at a meeting in Paris in 2015.
The number of carbon trading schemes has grown from almost zero a decade ago to 48 worldwide, according to a study by officials in Australia, which started its own carbon market last year.
By far the most are in Europe thanks to the EU’s emissions trading system which covers 31 countries and accounts for more than three-quarters of global carbon trading.
But the EU scheme has been hit by collapsing prices and other problems. Efforts to start national emissions trading in the US, the world’s second biggest carbon emitter, have failed, though the state of California launched its own carbon market last year.
Once the seven Chinese pilot schemes start operating, carbon markets are expected to cover some 880m people globally and about 20 per cent of worldwide emissions, according to the Australian climate commission.
Fonte: ft.com
