Cal­i­for­nia, Euro­pean Union can give China guid­ance on build­ing ETS

China Daily (USA) - - DEPTH - — PAUL WELITZKIN

China can look to ex­ist­ing emis­sion trad­ing sys­tems (ETS) in the Euro­pean Union and Cal­i­for­nia for guid­ance in build­ing its own trad­ing plat­form that is sched­uled to be­gin op­er­a­tions next year.

In 2013, Cal­i­for­nia launched its cap-and-trade pro­gram, which uses a mar­ket-based mech­a­nism to lower green­house gas emis­sions. The Cal­i­for­nia Air Re­sources Board, which runs the pro­gram, said the state is on course to meet its goal of re­duc­ing the over­all green­house gas emis­sions in 2020 to 1990 lev­els.

An­thony Mansell of the Cen­ter for Cli­mate and En­ergy So­lu­tions, a non­profit based in Ar­ling­ton, Vir­ginia, said ev­ery ETS is de­signed to re­flect the unique na­tional cir­cum­stances found in a sys­tem’s econ­omy.

“China has been de­vel­op­ing a pro­gram through its pi­lot pro­gram and that will give it a lot of use­ful in­for­ma­tion,” Mansell said. “The Cal­i­for­nia and EU pro­grams all pro­vide ex­pe­ri­ence that China can tap into.”

In June, the Euro­pean Com­mis­sion said it would step up col­lab­o­ra­tion with China on emis­sions trad­ing, with a new 10 mil­lion euro ($11.16 mil­lion) three-year project that is sched­uled to start in 2017. It will build on an ex­ist­ing co­op­er­a­tion project that started in 2014 and sup­ported the roll-out of China’s seven pi­lot pro­grams.

“A lot of what China has done in co­op­er­a­tion agree­ments with the EU and oth­ers is about try­ing to un­der­stand the tech­ni­cal as­pects of trad­ing,” Mansell said.

De­vel­op­ing an ETS is a very in­tense tech­ni­cal ini­tia­tive, said Mansell. An ETS is very data driven, sys­tems are re­quired to mon­i­tor emis­sions and solid ver­i­fi­ca­tion and fi­nan­cial ap­pli­ca­tions are re­quired to main­tain a suc­cess­ful sys­tem, he said.

Cal­i­for­nia and the EU’s ex­pe­ri­ence could be an im­por­tant re­source for China in de­vel­op­ing this tech­ni­cal ex­per­tise, added Mansell.

Cal­i­for­nia’s ETS is not with­out its prob­lems. The Wall Street Jour­nal reported that just 2 per­cent of the car­bon emis­sions cred­its that the Cal­i­for­nia Air Re­sources Board put up for auc­tion in May were sold. The quar­terly auc­tion raised only $10 mil­lion of the $500 mil­lion that the agency had pro­jected. The Cal­i­for­nia Cham­ber of Com­merce has chal­lenged the auc­tions as an il­le­gal tax.

Still the Cal­i­for­nia ETS ap­pears to have the pub­lic in its cor­ner. A July poll by the Pub­lic Pol­icy In­sti­tute of Cal­i­for­nia found that 69 per­cent fa­vor the state’s man­dated pol­lu­tion re­duc­tion goals and that more than 50 per­cent fa­vor cap-and­trade.

Reg­u­la­tors in the state are con­fi­dent that the util­i­ties, re­finer­ies and other in­dus­tries cov­ered by the cap-and-trade pro­gram will meet the goal of re­duc­ing their own emis­sions to 334.2 mil­lion met­ric tons by 2020, a re­duc­tion of more than 15 per­cent from 2015, ac­cord­ing to the Los An­ge­les Times.

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