Tipping Point: China Launches Carbon Market

December 19, 2017

Al Gore:

China’s move to create the world’s largest carbon market is yet another powerful sign that a global sustainability revolution is underway. With the top global polluter enacting policies to support the Paris Agreement and transition to a low carbon economy, it is clear that we’re at a tipping point in the climate crisis. Economic opportunities will flow to those countries who establish leadership in the markets of the future. American states, cities, businesses, investors, and citizens understand this opportunity. Leaders everywhere must choose to either act to solve the climate crisis, or watch their nations fall behind.

Scientific American:

China is set to introduce its equivalent of U.S. EPA’s Clean Power Plan next week, even as the Trump administration prepares to discard its electricity rule for the carbon sector.

China will debut an emissions trading system as soon as today that will begin by covering coal- and natural-gas-based power production. The program will eventually expand to a variety of manufacturing and industrial sectors.

“It is important to bear in mind that the first phase will be embryonic,” said Li Shuo, senior global policy adviser for Greenpeace East Asia, who has been briefed on some details of the coming plan. He stressed those could change before the launch.

The plan initially will include 11 different emissions baselines for power plants based on whether they run on coal or gas, their size, and other details, Li said.

“This means gas plants would be competing with other gas plants with similar scale,” he said, adding that the trading component of the program would initially be limited. It’s unclear what the starting price for emissions allowances will be.

It’s a slower start than the Chinese government initially promised, but environmentalists say that’s prudent. The world’s second-largest economy and largest global emitter of greenhouse gases has limited monitoring and verification capabilities.

“It is precisely the lack of transparency that has worried investors in other Chinese markets, and carbon markets are known for being notoriously tricky,” said Paul Bledsoe, a former Clinton White House climate adviser. China must also build the legal infrastructure that will allow it to hold companies accountable for noncompliance.

So greens say it makes sense for China to focus first on the power sector, which is its largest single source of emissions, before expanding.

Bloomberg New Energy:

China unveiled its plan for a national carbon market, creating the world’s biggest trading system for the climate-warming emissions.

The market will initially involve only the power sector, National Development and Reform Commission Vice Chairman Zhang Yong said Tuesday at a briefing in Beijing. While that’s a pullback from a previous plan to include eight industries, China’s market will still be bigger than the European Union’s system, encompassing 1,700 companies and about 3 billion metric tons of emissions. Zhang didn’t give details on when trading will start.

The world’s biggest carbon emitter wants to use a market-based system to help it cap emissions by about 2030. The nation is also making big bets on clean-energy projects to help reach its goal of deriving 20 percent of its energy from sources other than fossil fuels by that year.

China’s system will adopt a cap-and-trade rule in which the biggest corporate polluters purchase credits from those that don’t emit as much, and companies are encouraged to reduce their emissions so they can sell unused allocations. Companies that emit more than 26,000 tons of carbon annually will be included in the market, though that threshold might be lowered at some point, according to the NDRC.

The nation is pressing ahead with a trading plan as similar strategies in the European Union and elsewhere have struggled. The EU was the first to require carbon permits, in 2005, only to see the price plunge in part because participating nations handed out too many allowances for free.

The carbon market is expected to be fully functional by 2020, according to almost half of 260 industry participants in a survey conducted by China Carbon Forum, ICF International Inc. and SinoCarbon Innovation & Investment Co. between March and July. Forty-four percent anticipate that will happen between 2021 and 2025.


2 Responses to “Tipping Point: China Launches Carbon Market”

  1. indy222 Says:

    I expect renewables will continue to take up a larger share of the power market. Really nothing surprising there. Drilling is getting more expensive in general, and solar PV cheaper.

    But you’re missing the point! ANY increase in energy availability allows and stimulates the Human Imperative: economic civilization GROWTH, and every dollar of GDP spent globally requires new permanent energy consumption to support the additional civilization created and also to support the past creations. It’s a carrot dangled on a stick in front of a donkey by a banker on the back of that donkey. We’ve been increasing energy efficiency since the invention of the wheel 100,000 years ago. The U.S. has increased the efficiency with which we can generate a dollar of GDP by more than a factor of 2 over the past 50 years. Every watt of continuous energy consumption needed to produce a dollar of GDP in 1970, now needs to be only 0.40 watts, and it’s been a very smooth continuous change in efficiency in a positive direction. Similar world wide. Has it generated the “tipping point” to a great global sustainable future? NO! We take those savings and we SPEND them, requiring new energy, and most remains carbon energy, and will for some time into the future.

    We’d need to decarbonize at rates far beyond anything we’ve yet done even to hope for stable CO2 levels in the atmosphere, at far higher levels than today, by century’s end. Every 2 tons of CO2 emitted leaves a ton of CO2 in the atmosphere – permanently. There are no thermodynamically supported scenarios which are reasonable and which stabilze atmospheric CO2 levels this century, except with crippling loss of civilization growth, and that’s 10x more true when you include the permafrost carbon and 2.3% of that being methane, from the papers of the past 4 years.

    We need to NOT encourage complacency that some smarties in a lab are going to solve our problems (even assuming they’re not “terminated” by the Trumpsters). It’s just giving another credit card to an irresponsible teenager who’s already got a pack of bill collectors on their trail from the first card they maxed out.

  2. rhymeswithgoalie Says:

    China’s carbon market is largely theoretical at this point: They don’t have metrics on existing CO2 emitters, they haven’t established a price, and they don’t have a trading mechanism set up yet. Other than that, they’re good to go. :^/

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