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Policy of high carbon trading price defended by officials

Chinese officials have defended a much-criticised policy of setting high minimum price levels for global carbon trading, and expressed regret that the country's main pollution contributors such as coal power and chemical industries had yet to benefit from the booming greenhouse gas market.

A fixed floor price on the mainland, the world's top supplier of carbon credits in the Clean Development Mechanism (CDM) market under the Kyoto Protocol, was in line with the international emissions-cutting treaty and in the interests of a stable trading market, they said.

Speaking at the first Carbon Expo Asia, which closed yesterday, Gao Guangsheng, a climate change expert from the National Development and Reform Commission, said China's carbon credit prices, averaging US$10 a tonne, were set at a level sufficient to support the country's drive towards sustainable development.

'There should be adequate room for profits for buyers from Europe and North America,' he said. 'A stable pricing system in China will be conducive to the healthy development of the international CDM market in the long run.'

Although the mainland led in selling carbon credits with its 60 per cent share, a report by the World Bank and the International Emissions Trading Association has expressed concern that the high minimum price for China's Certified Emission Reduction credits would make it difficult to attract buyers.

But Lu Xuedu , from the Ministry of Science and Technology, said by keeping its prices stable, China had helped curb volatility in the global carbon market.

The Beijing expo, which was the first emissions-trading event in a developing country, attracted more than 80 exhibitors from over 40 countries.

More than 400 Chinese projects participated in the exhibition, mostly in the field of wind power and hydroelectricity.

Asked why the country's industrial polluters, such as coal power plants and chemical factories, were not invited, Mr Lu, also a member of the CDM executive board of the Kyoto Protocol, said it was mainly because academics had yet to figure out a way to make it work as such research was expensive.

'Our government has set energy efficiency as a priority and we certainly want to involve heavily polluted industries, but we are facing a bottleneck - methodology.'

Mr Lu said it was also a challenge for the world to work out ways to enlist participation in the trading mechanism.

'We are aware the high number of hydropower plants in China's CDM projects has caused some concern over eviction and their impact on the environment, but we don't actually have those problems,' he said, adding that the hydropower projects had passed environmental impact assessments.

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