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Industry hungry for China carbon trading scheme, after hurdles overcome

28 April 2012
Industry hungry for China carbon trading scheme, after hurdles overcome

BEIJING: The IETA (International Emissions Trading Association) Emissions Trading Workshop took place in Beijing from April 24-25, 2012, to help China’s leading industries prepare for and participate in a regulatory carbon trading scheme.

The IETA event took place at the Price Waterhouse Coopers Conference Center in Beijing, following the release of draft rules from Beijing municipal Government in late March. The rules outlined a carbon trading scheme that could cap CO2 emissions from electricity providers, manufacturers, the heating sector and major public buildings in the Chinese capital from next year.

The Workshop drew together a vast network of IETA member companies including international buyers, sellers, Government representatives, carbon verifiers and industry leaders, including those in finance and energy, who were eager to discuss how Chinese industries can prepare for a trading scheme such as the EU ETS. 

Participants discussed the importance of intervening at an early stage to benefit future business development. They also analyzed the scheme’s ideal design process, how to better cooperate with chamber of commerce, improve relationships with Chinese enterprises, directly lobby to higher policy makers with white papers, as well as how to work best with organizations like IETA.

The attendees decided that there are still many technical problems to be overcome, as well as uncertainty and risks to be anticipated. Some fundamental differences between Chinese carbon markets with others were highlighted as:

  • lack of technical choice for emitters to switch from coal to gas
  • limiting energy price control systems in China
  • lack of awareness around compliance.
  • CO2 is not set as a pollutant, while businesses are already regulated to reduce other pollutants.

During discussions around the scheme’s limitations, participants suggested that Chinese policy makers are not used to working with enterprises, so bilateral cooperation between governments is the most influential. It was also agreed that when schemes from the EU, USA, Japan and Australia are introduced to the Chinese counterparts, China’s specific circumstances are often overlooked.

Finally, when the group reviewed the Beijing pilot that took place on March 28, 2012, it was concluded that many people saw the pilot as a launch of studies, rather than a launch of a physical design of the carbon trading system. This is because involved partners are mainly academia parties, and because industries were not fully consulted.

At the end of the event, attending partners were assigned different tasks to be finished by the end of 2012, with the Beijing pilot trading expected to start from January 2013. These positive, transformative actions will help China’s leading industries prepare for and participate in a regulatory carbon trading scheme in the future.

Changhua Wu, Greater China Director, The Climate Group commented on the Workshop: “China is right at the beginning of a journey to develop and apply market-based instruments to address the climate challenge. Now is a critical moment when government, industries and the bigger society will put the best brains together to explore, design and experiment with a carbon trading market that will be most effective. The broad experience with the Carbon Development Mechanism in China and globally has built up the knowledge, understanding, and the level of confidence in both government and industries to integrate the market-based instruments with the policy landscape in China. Though there is still a long way to go, I believe that a well-developed carbon market will become very effective in the coming decade.”

More on our work in China.

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