California, European Union can give China guidance on building ETS
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.