China launches business-to-business carbon emissions trading system, potential positive impact on climate change | GLM

China launches business-to-business carbon emissions trading system, potential positive impact on climate change | GLM

China launched a nationwide carbon trading market on February 1, local time.If this market works effectively, it could be the biggest effort to reduce greenhouse gases in 2021.

China is the world’s largest greenhouse gas emitter, and China’s share of world emissions is rising.

The Chinese government is working to curb its environmental impact, and policies like the carbon trading system may drive the penetration of new technologies and increased demand for products and services from domestic startups and tech companies around the world.

Partial and widespread carbon markets in the United States and Europe offset carbon emissions by pricing industry carbon emissions and investing in projects to remove the same amount of greenhouse gases from the atmosphere. Encourage companies to do so.

This is an important component of the 2015 Paris Agreement, but it is also controversial. That’s because, as Gilles Dufrasne, policy director at Carbon Markets Watch, told Time in 2020, it could be a “big loophole” for emissions companies if not well implemented and effectively managed. Because it can be.

This is especially true for China. Corruption has been repeated in China, which has long sacrificed environmental policy and control of economic growth. This is not limited to China, but it has been decided to operate a system on a larger scale than any other country (except the United States).

The effectiveness of the policy is also influenced by the hierarchy that exists within the bureaucracy of the Chinese Communist Party. As China Dialogue pointed out, the policy was issued by the Ministry of Ecological Environment, which has weaker legal authority than the National Development and Reform Commission (NDRC). The NDRC is a major government agency that oversees macroeconomic policies across China and the country’s major economic initiatives.

No other country has introduced a larger emissions trading market than China, which is the largest emitter of 28% of the world’s greenhouse gases.


National People’s Congress (NPC) of the closing ceremony Xi Jinping Jintao to address in, March 2018, Beijing, China.

China first began testing emissions trading systems in Shenzhen, Shanghai, Beijing, Guangdong, Tianjin, Hubei, Chongqing and Fujian in 2011. The government has begun deploying these pilots in the power sector and other industries using systems that cap emissions based on carbon intensity (emissions per GDP unit) rather than absolute limits.

After the 2018 structural reforms, the plan drafted under the auspices of the NDRC was handed over to the Ministry of Ecological Environment. The transfer of emission caps and trading programs was just in the midst of the United States withdrawing from the Paris Agreement under the Donald Trump administration, abandoning climate regulations and initiatives.

China’s emission scheme was originally supposed to start in a trading simulation in 2020, but was hampered by the new coronavirus pandemic and was pushed back six months until its implementation on February 1, 2021.

For the time being, emissions trading covers China’s electricity industry and about 2000 power plant facilities. According to China Dialogue, this alone accounts for 30% of China’s total emissions, and the trading system will extend to heavy industries such as cement, steel, aluminum, chemicals and oil and gas.

For the time being, the government will allocate free allowances and launch auction slots “at the right time, depending on the situation.”

Concerns raised by state-owned and financial services companies that warn of such expressions, and the potential effects of carbon prices on profits and lending risks, are that the Chinese government still benefits economics rather than the environmental costs associated with industrial growth. It shows that it is important.

According to a market participant survey quoted by China Dialogue, the price per ton of carbon dioxide is expected to start at 41 yuan (about 670 yen) and rise to 66 yuan (about 1070 yen) by 2025. The price of carbon dioxide in China is expected to reach 77 yuan (about 1250 yen) by 2030.

Meanwhile, in 2017, economists Joseph Stiglitz and Nicholas Stern proposed a carbon price commission. They said that if the market and price affect behavior, carbon dioxide will be $ 40-80 by 2020 and $ 50-100 by 2030 (about 5,200-10,400 yen). ) Needed to be in the range.

No country has such a price. But the European Union is pretty close, and as a result, has the most greenhouse gas reductions.

Nevertheless, the Chinese government’s plans include public reporting requirements for validated enterprise-level emissions. And if the government decides to put a real price on it, the presence of the market can be a huge boon to start-ups of monitor and management equipment developing technologies for tracking carbon emissions.

An analyst at China Dialogue wrote:

The most difficult part of carbon pricing (pricing carbon emissions) is often at the start. It is possible for the Chinese government to decide to set higher targets in the national emissions trading scheme (ETS). If the mechanism is now underway and President Xi’s ambitions and political will in the climate sector do not diminish, it may accelerate. In the coming years, this may lead to lower caps, coverage of many sectors, transparent data provision, and effective intergovernmental coordination. This is especially true for energy and industry authorities, who need to see ETS as a measure with significant co-benefits for policy objectives, not as a threat to territory.


Melissa Galbraith
Melissa Galbraith is the World News reporter for Globe Live Media. She covers all the major events happening around the World. From Europe to Americas, from Asia to Antarctica, Melissa covers it all. Never miss another Major World Event by bookmarking her author page right here.