China treads cautiously in setting up carbon emissions trading

With pilot carbon emissions exchanges launched last year, the mainland is being urged to learn from the experiences of others, especially Europe

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While mainland China is the world's biggest producer of carbon dioxide emissions, it has been relatively late in establishing exchanges to trade the pollutants. Photo: AP

Published: 2:00pm, 13 Feb 2014Updated: 9:00am, 21 Aug 2017

China launched five regional carbon emissions exchanges last year, and two more are expected soon, but it is years away from having a mature trading platform.

The mainland, which is taking a cautious approach in building a market-based mechanism for the reduction of greenhouse gas emissions, could shorten its learning curve by drawing lessons from the world's largest carbon market in Europe.

China has the advantage of being a latecomer in establishing a market to trade carbon dioxide emission rights, so it could avoid some of the pitfalls faced by the European Union when it launched the EU Emissions Trading System (ETS) in 2005.

"China, as a follower, is in a better position. It is experimenting with different methods for a few years before it will consider rolling out a scheme on a national basis," said Charles Yonts, CLSA's head of sustainable research.

The central government picked Shenzhen, Shanghai, Beijing, Guangdong province, Tianjin, Chongqing and Hubei province to be test beds for carbon trading. Exchanges were launched last year in the first five places, while Chongqing and Hubei are expected to set theirs up within the next two months.

Lessons drawn from these pilots will be reviewed in 2015, after which Beijing will decide on whether to set up a national exchange.

"Carbon trading is new to China, so to cut risks, pilots are carried out in select regions with relatively developed economies, sufficient manpower and environmental protection awareness," said David Tang Yue-tan, the secretary of the board of the Tianjin Climate Exchange.