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A Chinese Carbon Market by 2015?

August 3, 2010

Point Carbon reports that:

China has decided to launch a domestic emissions trading scheme, a government official said.

A multi-ministerial meeting led by the National Reform and Development Commission (NDRC) made the decision to go ahead with carbon trading yesterday, an official told state-owned newspaper China Daily.

“The consensus that a domestic carbon-trading scheme is essential was reached, but a debate is still ongoing among experts and industries regarding what approach should be adopted,” the official, who wished to remain anonymous, said.

The set-up of the pilot scheme, which will be launched during China’s next five-year plan period (2011-2015), is yet to be decided.

Officials are discussing options such as initially imposing carbon caps on some sectors of the economy, such as coal-fired power production or energy-intensive manufacturing industries.

Another option would be to first launch the scheme in certain geographical areas, such as the big industrial cities on China’s eastern seaboard. 

Obviously some questions remain about how broad the coverage will be and how deep the targets – they could well be intensity targets. I read this as a mix of three things:

a) China trying to promote low carbon growth for its own sake – despite the cynicism about the sincerity of Chinese intentions in climate negotiations, Chinese officials do fear the longer term governance challenges of coping with climate change in a way that Western politicians don’t seem to.

b) It’s a way of trying to position themselves politically/legally in case of a fight over border tax adjustments on Chinese goods with western countries  – most notably the EU. Once they have some sort of carbon pricing regime in place, the Chinese are in a much stronger bargaining position to say that their products should not face extra carbon costs at the border of importer countries.  

c) It’s a way of also positioning itself as having taken earlier and more concrete action compared to many western countries – ahem, the US, Australia, Canada. This all gives China a stronger hand at the international negotiations.

 

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