Global cap-and-trade plans eyed at lo­cal level

China Daily (Canada) - - ACROSS AMERICAS - By HUA SHENGDUN in Wash­ing­ton

Car­bon mar­kets and taxes should be front and cen­ter as es­sen­tial pol­icy so­lu­tions to har­ness cli­mate ac­tions, an ex­pert says. And how to im­ple­ment th­ese prac­ti­cal poli­cies is crit­i­cal to mak­ing the Paris agree­ment ac­tu­ally hap­pen.

“We have seen many coun­tries are mak­ing sub­stan­tial progress in pro­mot­ing a car­bon trade sys­tem,” said Vikram Widge, head of cli­mate and car­bon fi­nance at the World Bank Group.

The pri­vate sec­tor in China is learn­ing very fast to adapt to the in­ter­na­tional car­bon trade sys­tem. China’s fi­nan­cial in­sti­tu­tions are also start­ing to fa­mil­iar­ize them­selves with the reg­u­la­tions, ac­cord­ing to Widge.

The points were made dur­ing a panel dis­cus­sion on Mon­day at the Cen­ter for Global De­vel­op­ment in Wash­ing­ton.

Cur­rently, China has seven lo­cal pi­lot emis­sions plans and had planed a na­tional roll­out in 2016, but it has been dif­fi­cult to in­te­grate the lo­cal mea­sures with the lack of trans­parency over quota al­lo­ca­tions and trad­ing prices, lead­ing ex­perts to be­lieve the na­tional plan could be pushed back as far as 2020, ac­cord­ing to the Fi­nan­cial Times.

“Putting a price on car­bon through ei­ther taxes or car­bon trade sys­tem is the only way to in­cen­tivize pri­vate sec­tors and mo­bi­lize pub­lic sources of fi­nance,” said Vi­tor Gas­par, di­rec­tor of the IMF’s fis­cal affairs depart­ment.

Gas­par said, the re­new­able en­ergy and en­ergy ef­fi­ciency mar­ket could be worth $5.3 tril­lion, which is the equiv­a­lent of 6.5 per­cent of the global GDP.

Car­bon pric­ing in the form of taxes could be diffi be­cause the agent for im­ple­ment­ing the pol­icy is the govern­ment in each coun­try, which is do­mes­tic scope. As an in­ter­na­tional fi­nan­cial or­ga­ni­za­tion, IMF pro­vides fi­nan­cial an­a­lyt­i­cal tools and sug­ges­tions to de­vel­op­ing coun­tries like China, ac­cord­ing to Gas­par.

By col­lect­ing taxes from pri­vate sec­tor op­er­a­tions, it can price car­bon emis­sions, which en­ables com­pa­nies to pre­dict costs and ad­just their in­vest­ment to les­son car­bon emis­sions.

The gov­ern­ments will use the tax rev­enue to help com­pa­nies re­duce la­bor costs and sub­si­dize fa­cil­i­ties emit­ting less car­bon, Gas­par said.

Pan Jialiang con­trib­uted to this story

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