China inches closer to national carbon market

The Chinese city of Tianjin has enlisted global carbon consultancy Ecofys to set up one of seven regional pilot carbon markets in preparation for a national carbon trading system planned for 2015, according to a statement the firm released on Monday.

The Asian Development Bank (ADB) funded the US$750,000 project to assist the Tianjin Climate Exchange with the design and implementation of its cap-and-trade emissions trading system (ETS), which is slated to start in 2013.

“This pilot project will offer valuable lessons for the design of a nationwide system to reduce the carbon intensity of the Chinese economy,” said ADB energy specialist Pradeep Perera.

China has a 2020 target of reducing the amount of carbon emitted for every unit of gross domestic product, known as carbon intensity, by 40 to 45 per cent below 2005 levels.

The Republic, whose growing use of coal led to a 9.3 per cent rise in carbon emissions in 2011, is now the world’s biggest emitter of carbon dioxide, according to the International Energy Agency.

Beijing, Shanghai, Shenzhen, Chongqing and the provinces of Guangdong and Hubei will also pilot ETS schemes.

Other Asia Pacific countries with national schemes either planned or in place include New Zealand, Australia and South Korea.

The United States, which is the world’s second biggest emitter, has been unable to implement a national carbon policy due to political disagreements. On Friday, a Reuters’ news report said a congressman had introduced a bill for a flexible carbon price, but then quoted sources saying such a bill was an “unlikely prospect” in an election year.

Both the US and China have resisted binding international commitments to emissions reductions.

To develop Tianjin’s ETS, Dutch head-quartered Ecofys said it has put together a ten-person team of local and international experts.

“For us, this represents a significant and important project that will help China lead the way in building successful domestic ETS schemes,” said Ecofys manager of market based mechanisms Alyssa Gilbert.

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