Emissions trading in China: risky, difficult, but necessary

● By Shenghao Feng, Australian National University ● China’s pilot emissions trading scheme was launched on June 18 in Shenzhen. Five other pilots – Beijing, Tianjin, Shanghai, Hubei and Guangdong – are also expected to be launched this year. Only Chongqing is yet to finalise an opening date. All face great problems: they are market systems in a non-market economy. But can those challenges be overcome? Government advance, market retreat Previously, China has relied primarily on government regulations or interventions to control its carbon emissions. There were bad memories of such interventions: towards the end of the 11th Five Year Plan, some local governments took the extreme measure of cutting off power supply to fulfil their emissions reduction targets. But these are isolated cases and are unlikely to happen again after the government openly apologised for the wrong doing. The broader picture is that the government’s major carbon-saving campaigns – including renewable energy subsidies and the “large substitute small (LSS)” program that intends to improve power generation efficiency – have helped China become a frontrunner in clean energy investment. In fact, research done by The Productivity Commission found China’s renewable energy subsidies are much more cost-effective in reducing carbon emissions than similar subsidies in seven other advanced economies; namely, the US, UK, Germany, Australia, New Zealand, Japan and South Korea. As China’s government-led carbon policies advance, some of the major existing emissions trading systems have to battle for survival. Earlier this year, a Bloomberg report speculated there is a 32% chance Australia will lose its hard-fought carbon pricing scheme at the election in September. Meanwhile, the European Parliament has just recently voted against a bill to reduce the number of permits floating on the EU-ETS, dropping the continent’s carbon price to a new low ...Zum vollständigen Artikel

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