China to launch scheme to curb CO2 emissions in 2017

China is launching a national cap-and-trade scheme in 2017 to curb emissions. While the details still need to be worked out, observers say it shows China's commitment to fight climate change.
Jeremy Koh, Channel NewsAsia 29 Nov 15;

BEIJING: China consumes more than half of the world's coal and emits twice as much carbon dioxide as the United States. However, in 2017, Beijing aims to launch the world's largest national cap-and-trade scheme, one that is expected to exceed the European Union's.

The scheme would limit the amount of pollution that companies can emit and let them pay competitive prices for a share of the quota. Businesses that do not use up their quota can sell the remainder, while those that need more than their quota have to buy additional permits. The aim is to induce companies to find ways to reduce greenhouse gas emissions.

The nationwide move builds on a series of trials that began in 2013 in regions, such as Shanghai and Guangdong.

“Generally speaking, this system worked better than many people thought, and that also gave the Government confidence to expand from pilot phase to national phase,” said Professor Zhang Zhongxiang from the College of Management and Economics at Tianjin University. “But there's still a long way to go as there's still a lot of preparation work to do.”

Specific details still need to be worked out.

The European Union has also struggled to make its decade-old emissions trading programme a success. The price of emitting carbon dioxide fell following the 2009 recession, and generous carbon dioxide emissions allowances have further undercut the market. If carbon is cheap, there would be little incentive for businesses to reduce emissions.

“Companies, businesses are always profit-driven so certainly this will add to their cost and they certainly want to try and reduce that cost,” said Professor Zhang.

While the cap-and-trade system covers key industries, such as power, iron and steel and chemicals, it has left out the transport sector, which itself is a massive contributor of greenhouse gases.

“We know that vehicle emissions are actually a very big proportion to air pollution emissions in large cities - in Beijing, in Shanghai - then if any policy measure can help reduce the emissions coming from vehicles, it could be a good solution,” said Mr Fu Lu, the China director of Clean Air Asia.

MARKING SUBSTANTIAL CHANGE

But observers have said despite the policy's limitations, China's announcement marks a substantial change in the Government’s attitude towards climate change, especially ahead of a major international climate conference that opens on Monday (Nov 30).

“A lot of environmental disputes and the Communist Party regards political stability as a top priority and if you always have the protests and disputes, it'll challenge their legitimacy and ruling, which they certainly don’t want to see,” said Professor Zhang.

“When the media attention was there and when the public outcry was there, actually as NGOs, we were happy because we knew then that the leaders in China, they would take actions, and yes they did. Very, very quickly,” added Mr Fu.

The cap-and-trade system builds on China's declaration to see its carbon dioxide emissions stabilise by around 2030.

- CNA/ek

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