Largest car­bon trad­ing sys­tem opens

China Daily European Weekly - - China News -

Mar­ket will in­volve more than 1,700 com­pa­nies gen­er­at­ing 3.3 bil­lion met­ric tons of car­bon

the Na­tional De­vel­op­ment and Re­form Com­mis­sion.

Still, it is ex­pected to ex­ceed the Euro­pean Union’s mar­ket, with more than 1,700 power gen­er­a­tion en­ter­prises gen­er­at­ing 3.3 bil­lion met­ric tons of car­bon ex­pected to be in­volved, ac­cord­ing to the com­mis­sion.

The power sec­tor ac­counts for about one-third of China’s car­bon diox­ide emis­sions.

Zhang Yong, vice-chair­man of the com­mis­sion, says the in­tro­duc­tion of the na­tion­wide mar­ket shows China is de­liv­er­ing on its Paris Agree­ment prom­ises.

China pledged to peak car­bon emis­sions by the end of 2030 in the Paris pact sealed in 2015.

Putting a price on car­bon will pro­pel mar­ket play­ers to fur­ther cut car­bon emis­sions, since they have to con­sider those costs in mak­ing fu­ture in­vest­ment and pro­duc­tion de­ci­sions, ac­cord­ing to Jiang Zhaoli, deputy di­rec­tor of the com­mis­sion’s De­part­ment of Cli­mate Change.

China will not in­tro­duce fi­nan­cial prod­ucts such as car­bon fu­tures in the early stage as some other coun­tries did be­cause spec­u­la­tive be­hav­ior will do more harm than good in en­cour­ag­ing ac­tual car­bon re­duc­tion, ac­cord­ing to Jiang. The ini­tial bench­mark for mar­ket in­clu­sion is set at 26,000 met­ric tons of car­bon or above a year.

Com­pa­nies in­volved that plan to emit more car­bon should re­duce emis­sions or buy spare cred­its from other com­pa­nies, and those with ex­tra al­lowances can sell or keep them for fu­ture use.

While cre­at­ing the mar­ket is a mile­stone, much needs to be done to make it a suc­cess in com­ing years, ex­perts say.

Trans­parency and public par­tic­i­pa­tion will be cru­cial for it to be an im­por­tant in­cen­tive for car­bon re­duc­tion, ac­cord­ing to Femke de Jong, pol­icy di­rec­tor of Car­bon Mar­ket Watch.

Liu Shuang, di­rec­tor of the Low Car­bon Eco­nomic Growth Pro­gram with the En­ergy Foun­da­tion China, says im­prove­ments will be needed for a stronger le­gal ba­sis, a more strin­gent cap and bet­ter al­lo­ca­tion.

“For im­me­di­ate next steps, it is es­sen­tial for reg­u­la­tors to set up a re­view­ing mech­a­nism to care­fully mon­i­tor op­er­a­tional progress and col­lect data in a timely way to in­form the de­sign and de­ci­sion-mak­ing for the next phases,” she says.

The gov­ern­ment has set a three­year road map for grad­u­ally im­prov­ing the frame­work be­fore al­low­ing real trans­ac­tions. Real trans­ac­tions are ex­pected to take place in 2020.

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