Inside Out | China’s emissions trading scheme a small but important step in climate change fight

If 2021 was not the year of the Covid-19 pandemic, it would be the year of climate change, in particular as wildfires rekindle across California, and floods bring death and disarray across the centre of Europe.

The past week provided important landmarks in the battle to cut global carbon dioxide emissions and slow the relentless rise in temperatures – landmarks that demonstrate the seriousness of political intent and the daunting challenges we face. They clarify in intimidating detail the practical changes required of us and provide a valuable stepping stone towards November’s crucially important COP26 climate change summit in Glasgow.

First, there was last Wednesday’s “Fit for 55” package of 13 measures, aimed at cutting carbon emissions in Europe by 55 per cent by 2030 from a baseline year of 1990 and to net zero by 2050. Most controversially, the package extends and strengthens carbon pricing to raise pressure on energy-intensive sectors and lays down the details of a carbon border adjustment mechanism (CBAM) that aims to prevent European companies being competitively penalised against companies operating from countries where carbon pricing measures are not yet in place.

The second landmark, less widely reported but nevertheless significant, was the long-delayed launch on Friday of China’s emissions trading scheme (ETS) on the Shanghai Environment and Energy Exchange. A reported 4.1 million tonnes of carbon dioxide were traded with a closing price of 51.20 yuan (US$7.90) per tonne.