China Launched Its First Pilot Carbon Emission Trading Scheme in Shenzhen

The first of seven pilot carbon emission trading schemes for China was launched in the city of Shenzhen, China on 18 June 2013.

Created On: Jun 19, 2013 12:34 ISTModified On: Jun 19, 2013 12:36 IST

The first of seven pilot carbon emission trading schemes for China was launched in the city of Shenzhen, China on 18 June 2013. It is worth noticing that China is the largest carbon gas emitter of the world.

Shenzhen which is situated across border from Hong Kong is among the Special Economic Zones (SEZs) of China. It houses 11 million residents. China committed to bring down the carbon emission intensity by 21 percent by the year 2015.

The power plant of the Shenzhen Energy Group sold the emission permit for 10000 tonnes to Guangdong arm of state oil group PetroChina for Rmb28 per tonne or 5 US dollar a tonne, and another 10000 tonnes to Hanergy, a privately owned power generator and solar-panel maker for a price of Rmb30 a tonne. This implies that China has established a carbon market.

Carbon markets are the ones which enable the companies to buy permits for emitting carbon dioxide from those companies which burn less carbon. This mechanism is aimed at encouraging the companies for reducing pollution as well as invest their money in the cleaner technologies.

About the Carbon Emission Trading Scheme

• The Carbon Emission Trading Scheme of Shenzhen covers 635 companies in overall 26 sectors which also include water supply, natural gas, manufacturing, industrial and electricity. These companies have carbon emissions above 20000 tons of CO2 equivalent. These 635 companies in the year 2010 discharged a total of 31.7 million tons of greenhouse gases, which is equivalent to 38 percent of the Shenzhen’s total.
• Under this Carbon Emission Trading Scheme, emission permits will, at first, be allocated to the companies free of cost. The companies which pollute more than the permissible limit, will have to buy the credits from those companies which reduce the emissions below targets set by the Chinese Government.
• This means that under this scheme, all the companies will be assigned an emission quota. The companies can then benefit or make profits by selling excess permits to the other companies.
China has six other pilot emissions trading schemes in the pipeline which will also begin in 2013 only. These trading schemes will begin in Tianjin, Shanghai, Hubei, Guangdong, Chongqing and Beijing. Together, all these schemes will regulate around 800 million to 1 billion tons of emissions by 2015.

This would be the second biggest cap-and-trade program of the world, only after Europe which covers 2.1 billion tons of emissions among 31 countries and also accounts for over three-quarters of global carbon trading.

In the meanwhile, the carbon trading scheme of Australia covers 380 million tons and that of California covers 165 million tons.

In case the pilot programs launched by China deliver reductions in the carbon emissions in a cost-effective manner and without any negative impact on the economy, they will indicate the future of China’s approach towards climate change as well as attitude to international agreement in 2015.

China also has the plan of launching nationwide carbon trading scheme by 2015.

It is also important to note that China has emerged as the top producer of carbon emissions, which are strongly responsible for climate change. This is because of China’s reliance on heavy industry as well as coal. China, in turn has emerged ahead of US, even though China’s Per Capita Income is much lower than that of US. China had also declared that the carbon emissions from the country would rise until 2030.

However, Beijing planned for a reduction of 40 percent by 2020.

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