China’s emissions trading pilots are starting to take shape as the EU’s flagship climate policy looks increasingly fragile.
There are 7 new pilot carbon emissions trading schemes in China, 5 in municipalities (Beijing, Chongqing, Shanghai, Shenzhen and Tainjin) – and two provinces (Guangdong and Hubei from 2013). These pilot projects will pave the way for a national trading scheme (ETS) to be implemented in 2016. Details are steadily emerging of the pilot schemes and China’s commitment to tackling climate change is growing increasingly clear, making it more difficult for Europe to argue that it is out in front and unable to increase its ambitions. At the same time as developing its own emissions trading schemes China is currently objecting to flights between China and Europe being included in the EU ETS. A new report from Sandbag suggests that China could include flights from the major cities within the emissions trading pilots and thereby enact the equivalent measure clause which would remove them from the EU scheme.
China’s domestic climate policies are gathering pace and have set in motion the development of seven pilot emissions trading schemes, putting ever more pressure on the EU to fix its own scheme.
In a report, entitled Turning the Tanker, to be launched at a joint report launch in the European Parliament tomorrow, Sandbag examines why China is looking to move away from traditional command and control measures in favour of more innovative market based mechanism to tackle environmental concerns.
Emissions trading is one such mechanism and China has already announced pilot projects to be implemented in five municipalities – Beijing, Chongqing, Shanghai, Shenzhen and Tainjin – and two provinces – Guangdong and Hubei from 2013. These pilot projects will pave the way for a national trading scheme (ETS) to be implemented in 2016.
Details are steadily emerging of the pilot schemes and China’s commitment to tackling climate change is growing increasingly clear, making it more difficult for Europe to argue that it is out in front and unable to increase its ambitions.
At the same time as developing its own emissions trading schemes China is currently objecting to flights between China and Europe being included in the European scheme. The report suggests that China could include flights from the major cities within the emissions trading pilots and thereby enact the equivalent measure clause which would remove them from the EU scheme.
Commenting on the report, Sandbag Policy Officer, Rob Elsworth, said:
“All too often China’s size and rapid development leads people to the conclusion that no action is being taken on climate change. However, behind the scenes domestic climate policy in China is advancing rapidly. Many challenges remain but the speed of advancement and the ambition of China’s emissions trading plans are remarkable. Europe needs to realise that its position as the world leader in carbon pricing and low carbon technologies is under real threat. Action must be taken now to fix the EU’s ailing emissions trading scheme.”
Aviation in China ETS could solve row with EU: report
The report, published by UK-based pressure group Sandbag, said nascent carbon trading schemes in the world’s second largest economy could provide a way for China to avoid being included in the EU scheme.
“This would help to boost demand in the pilot (Chinese) market and ensure any revenues from auctioning were gathered in China,” said the report, which examines how China can use emissions trading to slow its contribution to climate change.
The EU’s emissions trading directive contains a clause that exempts non-EU countries from the scheme when they implement “equivalent measures,” although what these are is not yet defined.
Countries including China, India, Russia and the U.S. oppose the inclusion of their airlines in the EU scheme, which they say unfairly penalises them by making them pay for emissions for the whole route, not just the European stretch of the journey.
China has said the inclusion of aviation in the EU ETS contravenes international law and has banned its carriers from complying.
It is also reported to have suspended orders between some of its airlines and European aircraft manufacturer Airbus, said to be worth $14 billion.
Rules and regulations for emissions trading in five Chinese cities and two provinces are at a very early stage, even though some of them are scheduled to launch from 2013 onwards.
By John McGarrity – email@example.com
Combet vouches for China amid emissions trading scheme doubt
by Philip Wen, Tom Arup
April 24, 2012 (Sydney Morning Herald)
THE Climate Change Minister, Greg Combet, says China is pursuing greenhouse gas emission reductions with “sincerity” despite the potential exclusion of the energy sector from the country’s pilot emissions trading schemes and a delay in their introduction.
Chinese officials are understood to have told a World Bank workshop in Shenzhen last month that the energy sector would not be included in the seven pilot schemes, prompting questions about their strength.
“I’m very mindful that there’s a large challenge to improve per-capita income and sustain economic growth but at the same time tackle the climate change issue,” Mr Combet said in Beijing yesterday after attending the Australia-China Climate Change Forum, where he met his Chinese counterpart, Xie Zhenhua.
China, which has surpassed the United States as the world’s largest greenhouse gas emitter in recent years, has been under increasing pressure to rein in emissions growth.
It had committed to establishing pilot emissions trading schemes from next year in five cities – Beijing, Tianjin, Shanghai, Shenzhen and Chongqing – and two provinces – Guangdong and Hubei – with a view to later developing a national carbon market. But Mr Combet said the delayed implementation of the pilot scheme in Beijing could push it out by a year longer than initially thought.
“They’ve indicated previously that they expect to do it in 2015,” Mr Combet said. “Given that the establishment of the pilot schemes may now be 2014, it could be 2016.”
Professor Han Wenke, director-general of China’s Energy Research Institute – part of the powerful National Development and Reform Council – said while energy was not included at this stage, it could be considered in future.
Dr Fuqiang Yang, senior adviser in Beijing for the Natural Resources Defence Council, said energy might be covered indirectly by the Beijing pilot because power consumers may be included in the scheme along with direct carbon emitters .
Details of China’s carbon trading pilot schemes are only now starting to emerge. Draft plans outlined this week suggest the Beijing pilot scheme will cover 600 companies, more than the 500 firms under Australia’s national carbon price.
In 2009, China pledged a 40% to 45% emission cut target from 2005 levels by 2020. ** It will also seek to meet 11.4% of its primary energy needs from non-fossil fuel sources by 2015.
The Chinese Premier, Wen Jiabao, warned in his annual government work report last month that “targets for conserving energy, reducing emissions, and controlling prices are not being met”.
What is a carbon intensity goal?
Carbon intensity is the ratio of carbon dioxide emissions per unit of output, which in this case is economic activity measured as gross domestic product (GDP). The Chinese carbon intensity goal will be calculated as energy-related CO2/GDP. Therefore, while the target includes CO2 emissions, it will not include other greenhouse gases or emission reductions from the land use sector. A carbon intensity target can help advance a country’s transition to a low-carbon economy. It is especially attractive to many developing countries, which have historically contributed relative low levels of greenhouse gas emissions and do not feel in a position to take on quantifiable economy-wide emission reduction targets. These countries’ current and future emissions growth compels them to take measures that promote early action. The assumption is that because these countries are still developing and have large infrastructure and development needs, absolute emissions will continue to grow, but the target will encourage a slower rate of emissions growth. How much slower is a key question in the overall global effort to address climate change.
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