China to launch world’s largest emissions trading program
HONG KONG â China is about to launch its long-planned national emissions trading program, a system that would create the world’s largest carbon market and double the share of global emissions covered by carbon emissions. such programs.
The carbon market will help the country reduce its greenhouse gas emissions and meet its goal of peaking emissions by 2030 and achieving carbon neutrality, or net zero emissions, by 2060, said officials at a press conference on Wednesday. China is the world’s largest carbon emitter.
Invitations for the launch ceremonies scheduled for Friday have been sent out, according to people familiar with the situation.
The program will initially involve 2,225 companies in the electricity sector. These companies are responsible for one-seventh of global carbon emissions from the combustion of fossil fuels, according to calculations by the International Energy Agency.
Under the trading program, emitters such as power plants and factories are given a fixed amount of carbon that they are allowed to release per year. They in turn can buy or sell these allowances. This pushes emitters to think of controlling and reducing emissions in terms of the market.
Bloomberg earlier announced that the carbon market would start trading on Friday.
Over the next three to five years, the market is expected to expand into seven other high-emitting industries: petrochemicals, chemicals, building materials, iron and steel, non-ferrous metals, paper, and domestic aviation.
Rather than being subject to absolute emission caps in other trading programs and offered by environmental officials, Chinese companies will start with allowances that use benchmarks based on previous years’ performance. which gives them more leeway. They can be traded through negotiation or auction, among other means.
Chinese officials have said they plan to add the cement, aluminum and steel sectors to the program next year. The program is expected to adopt stricter caps going forward, although the timing and scope have not been determined, people say.
We do not know how much a quota will trade, equivalent to 1 metric tonne of carbon emissions. Based on regional pilot projects over the previous two years, the average price in the domestic market is expected to be the equivalent of $ 6.18 to $ 7.73, Chinese vice minister Zhao Yingmin said on Wednesday. Environment.
The starting price is much lower than the approximately $ 59 to $ 70 per metric tonne of the European emissions trading program and the $ 55 to 69 per tonne of the UK system. This would bring China’s carbon emissions prices in line with those of a similar program in the United States.
Emissions trading experts expect the program to get off to a slow start, and the first year will focus on securing basic market functionality. “But once everything is in place, it will be one of China’s best mechanisms for inducing long-term, economically sustainable carbon reductions,” economics consultancy Trivium China told clients in a note this week.
The Chinese Ministry of Ecology and Environment will act as regulator and supervisor of the trading platform. Companies are supposed to compile and submit their emissions data to the provincial branches of the ministry, which are responsible for verifying the information and ensuring that the system is working as intended. Failure to comply could result in a fine of up to $ 4,600 or reduced future allowances.
First launched in 2011, plans for a national program were confirmed in a joint US-China climate statement ahead of the Paris climate talks in 2015. The Covid-19 pandemic has delayed plans for a smooth launch in 2020.
With senior officials busy before the Chinese Communist Party’s centenary on July 1, authorities had to postpone the planned launch date for the end of June by a few weeks, people familiar with the matter said.
âXiao Xiao in Beijing contributed to this article.
Write to Sha Hua at [email protected]
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