ENVIRONMENT
image

Beijing air pollution

Carbon exchanges to open in Beijing and Shanghai

PUBLISHED : Tuesday, 26 November, 2013, 4:21am
UPDATED : Tuesday, 26 November, 2013, 4:22am

China will launch two new pilot carbon trading schemes this week in Beijing and Shanghai as it strives to cut soaring rates of greenhouse gas, reduce choking smog and determine the best system for a nationwide roll-out.

The first of seven planned pilot schemes opened in Shenzhen in June, and another will be established for the whole of Guangdong province before the end of the year.

Three others are due to go into operation in Hubei province and the municipalities of Tianjin and Chongqing next year.

As UN-led climate talks stumbled in Warsaw last week, the head of the Chinese delegation Xie Zhenhua was keen to push the country's carbon dioxide cutting credentials, challenging developed nations to match the efforts being made by China to tackle global warming.

The new platforms, which will force industrial firms to buy credits to cover any carbon dioxide they emit above allocated quotas, also underscore Beijing's commitment to "market mechanisms" to slow emissions growth, in line with an ambitious raft of reforms outlined earlier this month.

The Shenzhen exchange covers 635 industrial firms and 197 government buildings, which accounted for about 40 per cent of the city's total emissions in 2010.

"It's definitely a move in the right direction, but there are concerns about activity - these are pilot schemes and are used as a learning experience, and local governments might not be particularly concerned by volumes," said Shawn He, a climate lawyer at the Hualian law firm in Beijing.

Trading is likely to start slowly as the government treads cautiously and tries to learn lessons from Europe, where an excess of credits has left carbon prices in the doldrums.

He, the lawyer, said there were concerns about the effectiveness of the pilot schemes, as no binding carbon caps would be imposed on enterprises and there were no legal means of forcing them to participate.

So far, trading volumes have been quite small in Shenzhen - only single-digit in some cases - although individual deals accounted for 40 per cent of all trades, the exchange said.

Industry experts said the small volumes meant it was too early to draw any meaningful conclusions about the Shenzhen scheme or its impact.

The central government hopes climate targets will help meet other policy goals on pollution, sustainable development and industrial restructuring.

As the world's biggest source of climate-changing carbon emissions, China is under domestic pressure from its population to counter air pollution and has pledged to cut the 2005 rate of carbon dioxide emissions per unit of gross domestic product growth by 40-45 per cent by 2020.

 

Promotions