+------------------------------------------------------------------------------+
China Carbon Trading May Be Held Up by Economic Growth Priority
2010-10-07 12:13:47.856 GMT
By Stuart Biggs
Oct. 7 (Bloomberg) -- China's plan to begin carbon trading
may be held up by negotiations with cities and industries over
how to set a limit for emissions, China's National Development
and Reform Commission said.
The Chinese government wants to begin a pilot program in a
single sector or city to test the impact of an emissions cap on
growth ahead of a possible nationwide move to carbon trading,
officials at China's top economic planner said this week during
climate talks in Tianjin, northern China.
The negotiations are "difficult" because any cap set on
emissions will inhibit economic development at a time when the
central government's priority is raising living standards for
the more than 150 million Chinese who subsist at poverty levels,
according to Sun Cuihua, deputy chief of the climate-change
department at the national planner.
"It's difficult to negotiate with one specific sector or
province because all of them are growing their economies," she
said at a briefing. Imposing a cap will "impact their local
economic growth."
The briefing took place as envoys from 175 governments met
for United Nations-led talks aimed at laying the groundwork for
an agreement to mitigate climate change. The Tianjin meeting is
the last before a Nov. 29-Dec. 10 summit in Cancun, Mexico.
Before the last summit in Copenhagen in December, China
said it planned to cut output of carbon dioxide gas per unit of
gross domestic product by 40 percent to 45 percent by 2020 from
2005 levels.
"We still want to have a trial because we need to find
such mechanisms to help meet our target and fulfill our
obligation" on emissions reductions, Sun said.
China, U.S.
Emissions in China, which has surpassed the U.S. to become
the world's biggest emitter of greenhouse gases, will rise as
the country continues its rapid economic growth, according to
Xie Zhenhua, vice chairman at the Commission.
In 2007, China became the largest emitter of energy-related
carbon dioxide, according to the International Energy Agency
data. The country's annual discharge of CO2 was more than six
billion tons in 2008, almost tripling from 1990s levels, IEA
said in a report on its website.
This contrasts with the European Union, where emissions of
greenhouse gases from the 27 member-states fell last year to
17.3 percent below 1990s levels, according to estimates by the
EU environment agency.
The EU agreed in 2008 to cut emissions by 20 percent this
decade compared with 1990 and is considering toughening its
target to 30 percent. It stopped short of doing so at the
Copenhagen climate summit, citing a lack of comparable efforts
by the U.S. and China.
'Follow With Interest'
"We follow with interest the discussions in China with
regard to more advanced carbon market mechanisms," EU climate
spokeswoman Maria Kokkonen said today. "As Europe has
implemented the world's largest carbon market and is committed
to building a strong international carbon market, we naturally
stand ready to share our rich experience in designing and
implementing a successful cap-and-trade system with China."
The bloc wants to make its carbon cap-and-trade market a
cornerstone of a global carbon market. Started in 2005, it
covers about 12,000 installations that produce energy or goods
ranging from paper to cement.
Polluters must have an allowance for each ton of carbon
dioxide they let off. Those producing more than their allowance
have to buy more; those that emit less can sell their surplus.
EC Mission
The European Commission, the EU's regulatory arm, sent a
mission to China in July to seek cooperation on carbon trading,
and the EU's climate commissioner Connie Hedegaard said this
week another visit is planned in November.
A pilot cap-and-trade program would likely be in one of the
five provinces and eight cities designated as low-carbon models,
said Wang Shu, the National Development and Reform Commission's
deputy director for climate change.
"Most regions still need to develop their economies, so
imposing a cap is very difficult," he said yesterday. "Maybe a
city can set up a cap to target high emissions factories but
we're still considering how to do that."
China already has voluntary carbon trading programs in
Beijing, Shanghai and Tianjin.
The Tianjin Climate Exchange trades emissions credits
backed mainly by projects that were originally developed for the
UN-backed CDM mechanism, Mu Lingling, vice president of the
exchange, said in an interview yesterday. Some project managers
decide not to go through the certification process, she said.
The exchange has handled 6,049 tons of voluntary credits
this month, the majority in Tianjin, she said.
For Related News and Information:
Most-read environment news: MNI ENV <GO>
Climate-change stories: NI CLIMATE <GO>
Most-read alternative energy news: MNI ALTNRG <GO>
--With assistance from Ewa Krukowska in Brussels. Editors:
Randall Hackley, Alex Devine
To contact the reporter on this story:
Stuart Biggs in Tianjin, China, via +81-3-3201-3093 or
sbiggs3@bloomberg.net.
To contact the editor responsible for this story:
Reed Landberg at +44-20-7330-7862 or
landberg@bloomberg.net.
