China urged to use market forces to help meet carbon emissions targets
- Former central bank chief Zhou Xiaochuan says linking the European and Asian markets will provide incentives to curb greenhouse gases
- President Xi Jinping has set an ‘ambitious but difficult’ target of making the country carbon-neutral by 2060
China should consider a programme to link the Asian and European carbon trading markets to help reach its goal of becoming carbon-neutral by 2060, according to a former central bank governor.
Zhou Xiaochuan told the International Finance Forum in Guangzhou on Saturday that the target announced by President Xi Jinping in September was “ambitious but difficult”.
Speaking via video link, he continued: “Carbon markets should be the main incentive mechanism as this would require emissions to be capped.”
China is the world’s largest carbon dioxide emitter, producing more than the United States and Europe combined. While the year-on-year increase in emissions is slowing and is projected to peak in 2030, major investment in technology and the transformation of the fossil fuel industry will be needed to become carbon-neutral.
The investment management firm Sanford C Bernstein and consultancy Wood Mackenzie have both calculated that the total cost could exceed US$5 trillion.
Zhou suggested that a tie-up between international carbon trading markets – similar to the Hong Kong-Shanghai Connect that allows investors in the city and Chinese mainland to trade financial products in each other’s markets – could improve efficiency.