China has proposed plans for its seventh carbon cap-and-trade program. This month, Guangdong
province joined six other cities and provinces in forming pilot programs to
reduce carbon emissions in energy intensive industries. Guangdong’s participation is significant
because the large southern province is a national industrial powerhouse for
China and includes the economic miracle city, Shezhen.
The pilot program is voluntary, but four cement companies
have already formally signed on. TaPai
Group, HaiLuo Cement, ZhongCai Cement, and HuaRun Cement have joined together
in a 1,300,000 ton carbon dioxide cap. The companies all intend to add new
production lines and establish carbon emissions targets. A representative from ZhongCai Cement pointed
out that, although there will be increased production expenses for meeting
emissions targets, the company will benefit from raising the bar for the whole
industry’s energy efficiency. A permanent
emissions trading program would create a barrier to entry for new or smaller
cement companies.
Coming towards the second half of its 12th five
year plan (2011-2015), China’s pilot carbon emissions trading programs focus on
bringing communications, transportation, and construction industries under cap-and-trade limits. One of the hurdles for
any new carbon exchange program is a lack of historical data. The Guangdong’s
pilot program includes mostly factories that are not accustomed to monitoring
emissions and so do not have years of data to base a market price for carbon
credits on. Currently, 90% of the
companies participate in the program for free, while 10% pay according to an
international market price. Other
questions remain as to what penalties will be in place for companies that fail
to meet their carbon quota and what role will the government play in the carbon
trading system. In any case Guangdong faces the huge challenge of attempting
emissions reductions while encouraging increases in industrial and economic
growth. China intends to have a national
carbon exchange program in place by 2016.
How the relatively wealthy Guangdong province decides to carry out its carbon
exchange program will mean a lot to other provinces making similar decisions.
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Written for SIEL by:
Althea Mickiewicz, 1L
This is certainly very interesting to know what China is doing in the area of climate change mitigation. It puts into a new light the responsibilities that are now falling upon the BRIC nations to take action on climate change.
ReplyDeleteThis was an issue in point for the more well established indutrialised nations during the last round of climate negotiations. That the term 'common but differentiated responsibility' no longer applies to BRIC. Especially China, who now produces as much CO2 per capita as the US.