June 23, 2024

China’s New Carbon Market, World’s Largest: Need to Know

5 min read

China, the world’s largest greenhouse gas polluter, opened a national carbon emissions trading market on Friday, a long-awaited move aimed at combating climate change.

The market is transforming polluting energy into a buy-and-sell allowance, and is part of the policies put forward by the Chinese government in an effort to demonstrate its commitment to significantly reducing carbon dioxide emissions in the coming decades. .

Here’s how the program works and what it can do.

Chinese President Xi Jinping has sought to make his country an environmentally responsible world power and pledge to tackle climate change. The new carbon market, this Instantaneously the world’s largest in terms of emissions levels, it is the latest in Beijing’s efforts.

Last year, Mr. G did two signature duties on the climate. He vowed to increase China’s carbon dioxide emissions before 2030. It will succeed Carbon neutralization before 2060, He said, the amount of carbon dioxide gas China emits into the atmosphere will be offset by methods such as afforestation.

Mr. Ji’s pledges, if realized, could make a significant difference in the world’s efforts to combat climate change. A International treaty Aiming to limit global warming to 2 degrees Celsius (3.6 degrees Fahrenheit) and, preferably 1.5 degrees Celsius, this century is unlikely unless China and other major powers act urgently to reduce greenhouse emissions.

China is under intense pressure at home and abroad to reduce emissions and reduce global warming. Surpassed the United States It was the biggest polluter in 2006. In 2019, China’s greenhouse gas emissions accounted for 27 percent of global emissions, more than the total of the next three major emitters, the United States, the European Union and India. Rhodium group.

These markets operate by controlling the amount of carbon dioxide that companies can emit, and create competition to encourage them to be more energy efficient and to follow cleaner technology.

Companies that reduce carbon production can sell their unused emissions payments; Those who violate their emission payments will have to buy more permits or pay fines.

By auctioning off payments and gradually reducing the amount of pollution that companies are allowed to release, governments can push companies into a race to adopt carbon-cutting technologies.

Emissions trading can be a more efficient and flexible tool for reducing emissions than top-down management measures, said Zhao Yingmin, Chinese Deputy Minister for the Environment. Said at a news conference in Beijing On Wednesday.

“It could provide businesses with a responsibility to contain greenhouse gas emissions and also provide an economic stimulus mechanism for carbon mitigation,” he said.

The Chinese government began local trials of the carbon trade a decade ago. A Summit with President Barack Obama In 2015, Mr. G established a national trade plan as a cornerstone of climate cooperation with the United States.

But Chinese officials are struggling to get the systems right for a national launch.

In order to operate the market, regulators must accurately measure emissions from factories and mills, and then ensure that those pollutants do not cheat by hiding or manipulating emissions data.

But it is challenging in China, with its vast industrial base and relatively poor control. There was already a company from Inner Mongolia, a region of northern China, participating in the new market The fine was imposed this month To falsify carbon emissions data.

The Chinese government initially said the market would include steelmaking, cement and other industries and power plants. But this reduced the scope to cover only coal and gas plants that provide electricity and heat – a sector with fewer soldiers and easier to monitor. Other industries may be brought to market in the coming years.

“It starts with the power sector now, because it is very mature in data quality and other systems,” said Zhang Jiliang, director of the Tsinghua University Energy, Environment and Economics Institute. “But I think sectors like cement, electrolytic aluminum and steel will join very soon.”

Nevertheless, China’s coal and gas power sector is so large that the project already exists Covers one-tenth In total global carbon dioxide emissions. About 2,225 power plant operators – many of them subsidiaries of state-owned power companies in China – were selected to trade on the platform run by the Shanghai Environment and Energy Exchange.

To date, the largest carbon emissions market is in Europe, followed by California. Ultimately, these and other emissions trading ventures could work together to create a global market. For now, international investors or financial institutions will not be allowed to buy in China’s carbon market.

In the first deal since the Chinese market opened on Friday morning, a company paid $ 1.2 million to emit 160,000 metric tons of emissions at $ 8 a tonne. Chinese news agency launches new marketSignificant milestoneIn resisting global warming.

“Carbon market prices will definitely go up,” said Professor Zhang of Tsinghua. “In my view, futures allocations will be tight and carbon prices could rise to $ 15.”

But most experts expect China’s plan to take years to mature into a better tool for controlling emissions.

Participating power plants have received free pollution permits to practice reporting data and trade. The Ministry of Environment and Environment, which runs the project, has said it may then introduce auctions for permits.

China’s trade plan does not place a fixed ceiling on carbon dioxide emissions from a power producer; Instead, it sets a limit on the amount of carbon per unit of electricity. If that loose approach means companies face less pressure to reduce pollution, they should at least get started.

But the plan could lead to the development of sharp teeth over time, especially if China comes up with an emission cap and steep fines for exceeding pollution limits.

“Its role will not kick in immediately,” he said. Jianyu Zhang, The chief representative of the China Program on Environmental Protection said in an interview. “The impact will be felt mainly by planning the entire power line, and this will reveal the price of carbon.”

Li Yu Contributing research.

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