China's cautious carbon market take-off

China launched its first pilot emission trading program this past June. This development is potentially a major marker in the country’s efforts to reduce greenhouse gas (greenhouse gas) emissions.

The Shenzhen Emissions Trading Scheme (ETS) program will cover some 635 industrial companies from 26 industries. This is the first of seven proposed pilot greenhouse gas cap-and-trade schemes in China, which the country has been developing since 2011. Besides Shenzhen, four of the other pilots are expected to start trading this year.1

In 2010, these 635 industrial companies emitted 31.7 million tons of carbon dioxide and contributed 59 per cent of the Industrial Added Value (gross domestic product (GDP) due to industry) and 26 per cent of Shenzhen’s GDP.

While most experts agree that the ETS will not be a major driver of emission reductions in the immediate future, these pilots are an important capacity-building mechanism for the government, companies, and third parties to test relevant methodologies and procedures.

Traditionally, China has been better at using administrative measures rather than market-based measures to meet its carbon emissions reduction goals. For example, China reduced its energy intensity by 19 per cent during the 11th Five Year Plan (11FYP) period (2006-2010), mainly through top-down, national policies, such as closing down small plants; disaggregating reduction targets to large companies, provinces, and cities (this is important because it places responsibility for meeting the targets directly on individual government officials and large companies, see: Top-1000 program and Energy-Saving Target Responsibility System); and setting up product energy performance standards.

An Ambitious Target

Shenzhen has set up quite an ambitious target for its ETS compared to existing national or local commitments. The 635 companies will be given a roughly 100 million metric ton CO2 emission allowance for free over the next three years. If the companies only emit their allotted amount, this would be equal to a 32 per cent reduction in terms of GDP emission intensity. To put things into perspective, China is committed to reduce its emission intensity by 40 to 45 per cent by 2020, and Shenzhen’s carbon intensity reduction target during the current Five-Year Plan period (2011-2015) is 21 per cent. It is worth noting that the allowances are determined by emissions intensity rather than in absolute terms, meaning the government will review companies’ Industrial Added Value on an annual basis and increase or decrease the absolute emission allowance to maintain a fixed emissions-to-GDP ratio. Intensity-derived allowances are a novel concept and could hold lessons for other developing countries.

Some Challenges

One of the main challenges that the ETS pilots face is their legal basis. For energy conservation, the national Energy Conservation Law provides a solid legal basis for the government. The law allows the government to collect energy-related data and set conservation targets for enterprises, as well as to stipulate legal consequences for non-compliance. The ETS pilots, however, are based on ordinances from local legislatures. As a result, the regulation has fewer teeth. Ensuring that there are strong, enforceable penalties for non-compliance will be important for the success of the program.

Data quality is another frequently cited challenge. The national government has not yet mandated a unified methodology to account and report greenhouse gas emissions. Although the ETS pilots are adopting internationally recognized greenhouse gas accounting and reporting frameworks, each ETS pilot is likely to develop similar but slightly different methodologies, making it more difficult to link between pilots or scale them up to the national level. Furthermore, the ETS pilots are generally hesitant to put in place stringent data-quality requirements out of the fear that companies don’t have enough capacity. The fact that caps are derived from intensity targets adds another layer of uncertainty, as economic data such as Industrial Value Added may also be subject to manipulation. The pilots will provide an opportunity for China to address data quality issues.

Last but not least, the political will to reach the ambitious reduction target is yet to be tested. Chinese officials have estimated China’s emissions will peak between 2030 and 2040. However, there are influential experts advocating for the 2025 timeline, and at least one ETS pilot is studying the possibility of peaking as soon as 2015. Building support for the ETS pilots will come from showing that the pilot programs are compatible with economic growth, which continues to be a priority in China. In 2012, Shanghai’s economy grew its GDP by 7.5 per cent, which was the slowest economic growth of any pilot site. Four of the seven pilot sites had double-digit GDP growth.

While these are some of the obstacles to overcome, the ETS projects can offer a strong starting point for a market-based approach to constrain emissions in China. If successful, these pilots can then be scaled up nationally, and will help show that China is serious about tackling its emissions and addressing the growing threat of climate change.

- See more at: http://insights.wri.org/news/2013/08/inside-china%E2%80%99s-emissions-trading-scheme-first-steps-and-road-ahead#sthash.0kK5tXwl.dpuf

China launched its first pilot emission trading program this past June. This development is potentially a major marker in the country’s efforts to reduce greenhouse gas (greenhouse gas) emissions.

The Shenzhen Emissions Trading Scheme (ETS) program will cover some 635 industrial companies from 26 industries. This is the first of seven proposed pilot greenhouse gas cap-and-trade schemes in China, which the country has been developing since 2011. Besides Shenzhen, four of the other pilots are expected to start trading this year.1

In 2010, these 635 industrial companies emitted 31.7 million tons of carbon dioxide and contributed 59 per cent of the Industrial Added Value (gross domestic product (GDP) due to industry) and 26 per cent of Shenzhen’s GDP.

While most experts agree that the ETS will not be a major driver of emission reductions in the immediate future, these pilots are an important capacity-building mechanism for the government, companies, and third parties to test relevant methodologies and procedures.

Traditionally, China has been better at using administrative measures rather than market-based measures to meet its carbon emissions reduction goals. For example, China reduced its energy intensity by 19 per cent during the 11th Five Year Plan (11FYP) period (2006-2010), mainly through top-down, national policies, such as closing down small plants; disaggregating reduction targets to large companies, provinces, and cities (this is important because it places responsibility for meeting the targets directly on individual government officials and large companies, see: Top-1000 program and Energy-Saving Target Responsibility System); and setting up product energy performance standards.

An Ambitious Target

Shenzhen has set up quite an ambitious target for its ETS compared to existing national or local commitments. The 635 companies will be given a roughly 100 million metric ton CO2 emission allowance for free over the next three years. If the companies only emit their allotted amount, this would be equal to a 32 per cent reduction in terms of GDP emission intensity. To put things into perspective, China is committed to reduce its emission intensity by 40 to 45 per cent by 2020, and Shenzhen’s carbon intensity reduction target during the current Five-Year Plan period (2011-2015) is 21 per cent. It is worth noting that the allowances are determined by emissions intensity rather than in absolute terms, meaning the government will review companies’ Industrial Added Value on an annual basis and increase or decrease the absolute emission allowance to maintain a fixed emissions-to-GDP ratio. Intensity-derived allowances are a novel concept and could hold lessons for other developing countries.

Some Challenges

One of the main challenges that the ETS pilots face is their legal basis. For energy conservation, the national Energy Conservation Law provides a solid legal basis for the government. The law allows the government to collect energy-related data and set conservation targets for enterprises, as well as to stipulate legal consequences for non-compliance. The ETS pilots, however, are based on ordinances from local legislatures. As a result, the regulation has fewer teeth. Ensuring that there are strong, enforceable penalties for non-compliance will be important for the success of the program.

Data quality is another frequently cited challenge. The national government has not yet mandated a unified methodology to account and report greenhouse gas emissions. Although the ETS pilots are adopting internationally recognized greenhouse gas accounting and reporting frameworks, each ETS pilot is likely to develop similar but slightly different methodologies, making it more difficult to link between pilots or scale them up to the national level. Furthermore, the ETS pilots are generally hesitant to put in place stringent data-quality requirements out of the fear that companies don’t have enough capacity. The fact that caps are derived from intensity targets adds another layer of uncertainty, as economic data such as Industrial Value Added may also be subject to manipulation. The pilots will provide an opportunity for China to address data quality issues.

Last but not least, the political will to reach the ambitious reduction target is yet to be tested. Chinese officials have estimated China’s emissions will peak between 2030 and 2040. However, there are influential experts advocating for the 2025 timeline, and at least one ETS pilot is studying the possibility of peaking as soon as 2015. Building support for the ETS pilots will come from showing that the pilot programs are compatible with economic growth, which continues to be a priority in China. In 2012, Shanghai’s economy grew its GDP by 7.5 per cent, which was the slowest economic growth of any pilot site. Four of the seven pilot sites had double-digit GDP growth.

While these are some of the obstacles to overcome, the ETS projects can offer a strong starting point for a market-based approach to constrain emissions in China. If successful, these pilots can then be scaled up nationally, and will help show that China is serious about tackling its emissions and addressing the growing threat of climate change.

- See more at: http://insights.wri.org/news/2013/08/inside-china%E2%80%99s-emissions-trading-scheme-first-steps-and-road-ahead#sthash.0kK5tXwl.dpuf

China launched its first pilot emission trading program this past June. This development is potentially a major marker in the country’s efforts to reduce greenhouse gas (greenhouse gas) emissions.

The Shenzhen Emissions Trading Scheme (ETS) program will cover some 635 industrial companies from 26 industries. This is the first of seven proposed pilot greenhouse gas cap-and-trade schemes in China, which the country has been developing since 2011. Besides Shenzhen, four of the other pilots are expected to start trading this year.1

In 2010, these 635 industrial companies emitted 31.7 million tons of carbon dioxide and contributed 59 per cent of the Industrial Added Value (gross domestic product (GDP) due to industry) and 26 per cent of Shenzhen’s GDP.

While most experts agree that the ETS will not be a major driver of emission reductions in the immediate future, these pilots are an important capacity-building mechanism for the government, companies, and third parties to test relevant methodologies and procedures.

Traditionally, China has been better at using administrative measures rather than market-based measures to meet its carbon emissions reduction goals. For example, China reduced its energy intensity by 19 per cent during the 11th Five Year Plan (11FYP) period (2006-2010), mainly through top-down, national policies, such as closing down small plants; disaggregating reduction targets to large companies, provinces, and cities (this is important because it places responsibility for meeting the targets directly on individual government officials and large companies, see: Top-1000 program and Energy-Saving Target Responsibility System); and setting up product energy performance standards.

An Ambitious Target

Shenzhen has set up quite an ambitious target for its ETS compared to existing national or local commitments. The 635 companies will be given a roughly 100 million metric ton CO2 emission allowance for free over the next three years. If the companies only emit their allotted amount, this would be equal to a 32 per cent reduction in terms of GDP emission intensity. To put things into perspective, China is committed to reduce its emission intensity by 40 to 45 per cent by 2020, and Shenzhen’s carbon intensity reduction target during the current Five-Year Plan period (2011-2015) is 21 per cent. It is worth noting that the allowances are determined by emissions intensity rather than in absolute terms, meaning the government will review companies’ Industrial Added Value on an annual basis and increase or decrease the absolute emission allowance to maintain a fixed emissions-to-GDP ratio. Intensity-derived allowances are a novel concept and could hold lessons for other developing countries.

Some Challenges

One of the main challenges that the ETS pilots face is their legal basis. For energy conservation, the national Energy Conservation Law provides a solid legal basis for the government. The law allows the government to collect energy-related data and set conservation targets for enterprises, as well as to stipulate legal consequences for non-compliance. The ETS pilots, however, are based on ordinances from local legislatures. As a result, the regulation has fewer teeth. Ensuring that there are strong, enforceable penalties for non-compliance will be important for the success of the program.

Data quality is another frequently cited challenge. The national government has not yet mandated a unified methodology to account and report greenhouse gas emissions. Although the ETS pilots are adopting internationally recognized greenhouse gas accounting and reporting frameworks, each ETS pilot is likely to develop similar but slightly different methodologies, making it more difficult to link between pilots or scale them up to the national level. Furthermore, the ETS pilots are generally hesitant to put in place stringent data-quality requirements out of the fear that companies don’t have enough capacity. The fact that caps are derived from intensity targets adds another layer of uncertainty, as economic data such as Industrial Value Added may also be subject to manipulation. The pilots will provide an opportunity for China to address data quality issues.

Last but not least, the political will to reach the ambitious reduction target is yet to be tested. Chinese officials have estimated China’s emissions will peak between 2030 and 2040. However, there are influential experts advocating for the 2025 timeline, and at least one ETS pilot is studying the possibility of peaking as soon as 2015. Building support for the ETS pilots will come from showing that the pilot programs are compatible with economic growth, which continues to be a priority in China. In 2012, Shanghai’s economy grew its GDP by 7.5 per cent, which was the slowest economic growth of any pilot site. Four of the seven pilot sites had double-digit GDP growth.

While these are some of the obstacles to overcome, the ETS projects can offer a strong starting point for a market-based approach to constrain emissions in China. If successful, these pilots can then be scaled up nationally, and will help show that China is serious about tackling its emissions and addressing the growing threat of climate change.

- See more at: http://insights.wri.org/news/2013/08/inside-china%E2%80%99s-emissions-trading-scheme-first-steps-and-road-ahead#sthash.0kK5tXwl.dpuf

China launched its first pilot emission trading program this past June. This development is potentially a major marker in the country’s efforts to reduce greenhouse gas (greenhouse gas) emissions.

The Shenzhen Emissions Trading Scheme (ETS) program will cover some 635 industrial companies from 26 industries. This is the first of seven proposed pilot greenhouse gas cap-and-trade schemes in China, which the country has been developing since 2011. Besides Shenzhen, four of the other pilots are expected to start trading this year.1

In 2010, these 635 industrial companies emitted 31.7 million tons of carbon dioxide and contributed 59 per cent of the Industrial Added Value (gross domestic product (GDP) due to industry) and 26 per cent of Shenzhen’s GDP.

While most experts agree that the ETS will not be a major driver of emission reductions in the immediate future, these pilots are an important capacity-building mechanism for the government, companies, and third parties to test relevant methodologies and procedures.

Traditionally, China has been better at using administrative measures rather than market-based measures to meet its carbon emissions reduction goals. For example, China reduced its energy intensity by 19 per cent during the 11th Five Year Plan (11FYP) period (2006-2010), mainly through top-down, national policies, such as closing down small plants; disaggregating reduction targets to large companies, provinces, and cities (this is important because it places responsibility for meeting the targets directly on individual government officials and large companies, see: Top-1000 program and Energy-Saving Target Responsibility System); and setting up product energy performance standards.

An Ambitious Target

Shenzhen has set up quite an ambitious target for its ETS compared to existing national or local commitments. The 635 companies will be given a roughly 100 million metric ton CO2 emission allowance for free over the next three years. If the companies only emit their allotted amount, this would be equal to a 32 per cent reduction in terms of GDP emission intensity. To put things into perspective, China is committed to reduce its emission intensity by 40 to 45 per cent by 2020, and Shenzhen’s carbon intensity reduction target during the current Five-Year Plan period (2011-2015) is 21 per cent. It is worth noting that the allowances are determined by emissions intensity rather than in absolute terms, meaning the government will review companies’ Industrial Added Value on an annual basis and increase or decrease the absolute emission allowance to maintain a fixed emissions-to-GDP ratio. Intensity-derived allowances are a novel concept and could hold lessons for other developing countries.

Some Challenges

One of the main challenges that the ETS pilots face is their legal basis. For energy conservation, the national Energy Conservation Law provides a solid legal basis for the government. The law allows the government to collect energy-related data and set conservation targets for enterprises, as well as to stipulate legal consequences for non-compliance. The ETS pilots, however, are based on ordinances from local legislatures. As a result, the regulation has fewer teeth. Ensuring that there are strong, enforceable penalties for non-compliance will be important for the success of the program.

Data quality is another frequently cited challenge. The national government has not yet mandated a unified methodology to account and report greenhouse gas emissions. Although the ETS pilots are adopting internationally recognized greenhouse gas accounting and reporting frameworks, each ETS pilot is likely to develop similar but slightly different methodologies, making it more difficult to link between pilots or scale them up to the national level. Furthermore, the ETS pilots are generally hesitant to put in place stringent data-quality requirements out of the fear that companies don’t have enough capacity. The fact that caps are derived from intensity targets adds another layer of uncertainty, as economic data such as Industrial Value Added may also be subject to manipulation. The pilots will provide an opportunity for China to address data quality issues.

Last but not least, the political will to reach the ambitious reduction target is yet to be tested. Chinese officials have estimated China’s emissions will peak between 2030 and 2040. However, there are influential experts advocating for the 2025 timeline, and at least one ETS pilot is studying the possibility of peaking as soon as 2015. Building support for the ETS pilots will come from showing that the pilot programs are compatible with economic growth, which continues to be a priority in China. In 2012, Shanghai’s economy grew its GDP by 7.5 per cent, which was the slowest economic growth of any pilot site. Four of the seven pilot sites had double-digit GDP growth.

While these are some of the obstacles to overcome, the ETS projects can offer a strong starting point for a market-based approach to constrain emissions in China. If successful, these pilots can then be scaled up nationally, and will help show that China is serious about tackling its emissions and addressing the growing threat of climate change.

- See more at: http://insights.wri.org/news/2013/08/inside-china%E2%80%99s-emissions-trading-scheme-first-steps-and-road-ahead#sthash.0kK5tXwl.dpuf

China launched its first pilot emission trading program this past June. This development is potentially a major marker in the country’s efforts to reduce greenhouse gas (greenhouse gas) emissions.

The Shenzhen Emissions Trading Scheme (ETS) program will cover some 635 industrial companies from 26 industries. This is the first of seven proposed pilot greenhouse gas cap-and-trade schemes in China, which the country has been developing since 2011. Besides Shenzhen, four of the other pilots are expected to start trading this year.1

In 2010, these 635 industrial companies emitted 31.7 million tons of carbon dioxide and contributed 59 per cent of the Industrial Added Value (gross domestic product (GDP) due to industry) and 26 per cent of Shenzhen’s GDP.

While most experts agree that the ETS will not be a major driver of emission reductions in the immediate future, these pilots are an important capacity-building mechanism for the government, companies, and third parties to test relevant methodologies and procedures.

Traditionally, China has been better at using administrative measures rather than market-based measures to meet its carbon emissions reduction goals. For example, China reduced its energy intensity by 19 per cent during the 11th Five Year Plan (11FYP) period (2006-2010), mainly through top-down, national policies, such as closing down small plants; disaggregating reduction targets to large companies, provinces, and cities (this is important because it places responsibility for meeting the targets directly on individual government officials and large companies, see: Top-1000 program and Energy-Saving Target Responsibility System); and setting up product energy performance standards.

An Ambitious Target

Shenzhen has set up quite an ambitious target for its ETS compared to existing national or local commitments. The 635 companies will be given a roughly 100 million metric ton CO2 emission allowance for free over the next three years. If the companies only emit their allotted amount, this would be equal to a 32 per cent reduction in terms of GDP emission intensity. To put things into perspective, China is committed to reduce its emission intensity by 40 to 45 per cent by 2020, and Shenzhen’s carbon intensity reduction target during the current Five-Year Plan period (2011-2015) is 21 per cent. It is worth noting that the allowances are determined by emissions intensity rather than in absolute terms, meaning the government will review companies’ Industrial Added Value on an annual basis and increase or decrease the absolute emission allowance to maintain a fixed emissions-to-GDP ratio. Intensity-derived allowances are a novel concept and could hold lessons for other developing countries.

Some Challenges

One of the main challenges that the ETS pilots face is their legal basis. For energy conservation, the national Energy Conservation Law provides a solid legal basis for the government. The law allows the government to collect energy-related data and set conservation targets for enterprises, as well as to stipulate legal consequences for non-compliance. The ETS pilots, however, are based on ordinances from local legislatures. As a result, the regulation has fewer teeth. Ensuring that there are strong, enforceable penalties for non-compliance will be important for the success of the program.

Data quality is another frequently cited challenge. The national government has not yet mandated a unified methodology to account and report greenhouse gas emissions. Although the ETS pilots are adopting internationally recognized greenhouse gas accounting and reporting frameworks, each ETS pilot is likely to develop similar but slightly different methodologies, making it more difficult to link between pilots or scale them up to the national level. Furthermore, the ETS pilots are generally hesitant to put in place stringent data-quality requirements out of the fear that companies don’t have enough capacity. The fact that caps are derived from intensity targets adds another layer of uncertainty, as economic data such as Industrial Value Added may also be subject to manipulation. The pilots will provide an opportunity for China to address data quality issues.

Last but not least, the political will to reach the ambitious reduction target is yet to be tested. Chinese officials have estimated China’s emissions will peak between 2030 and 2040. However, there are influential experts advocating for the 2025 timeline, and at least one ETS pilot is studying the possibility of peaking as soon as 2015. Building support for the ETS pilots will come from showing that the pilot programs are compatible with economic growth, which continues to be a priority in China. In 2012, Shanghai’s economy grew its GDP by 7.5 per cent, which was the slowest economic growth of any pilot site. Four of the seven pilot sites had double-digit GDP growth.

While these are some of the obstacles to overcome, the ETS projects can offer a strong starting point for a market-based approach to constrain emissions in China. If successful, these pilots can then be scaled up nationally, and will help show that China is serious about tackling its emissions and addressing the growing threat of climate change.

- See more at: http://insights.wri.org/news/2013/08/inside-china%E2%80%99s-emissions-trading-scheme-first-steps-and-road-ahead#sthash.0kK5tXwl.dpuf

World Resources Institute

China launched its first pilot emission trading program this past June. This development is potentially a major marker in the country’s efforts to reduce greenhouse gas emissions.

The Shenzhen Emissions Trading Scheme program will cover some 635 industrial companies from 26 industries. This is the first of seven proposed pilot greenhouse gas cap-and-trade schemes in China, which the country has been developing since 2011. Besides Shenzhen, four of the other pilots are expected to start trading this year.

In 2010, these 635 industrial companies emitted 31.7 million tonnes of carbon dioxide and contributed 59 per cent of the Industrial Added Value (gross domestic product due to industry) and 26 per cent of Shenzhen’s GDP.

While most experts agree that the ETS will not be a major driver of emission reductions in the immediate future, these pilots are an important capacity-building mechanism for the government, companies, and third parties to test relevant methodologies and procedures.

Traditionally, China has been better at using administrative measures rather than market-based measures to meet its carbon emissions reduction goals. For example, China reduced its energy intensity by 19 per cent during the 11th Five Year Plan period (2006-2010), mainly through top-down, national policies, such as closing down small plants; disaggregating reduction targets to large companies, provinces, and cities (this is important because it places responsibility for meeting the targets directly on individual government officials and large companies – see: Top-1000 program and Energy-Saving Target Responsibility System); and setting up product energy performance standards.

An ambitious target

Shenzhen has set up quite an ambitious target for its ETS compared to existing national or local commitments.

The 635 companies will be given a roughly 100 million metric tonne CO2 emission allowance for free over the next three years. If the companies only emit their allotted amount, this would be equal to a 32 per cent reduction in terms of GDP emission intensity.

To put things into perspective, China is committed to reduce its emission intensity by 40-45 per cent by 2020, and Shenzhen’s carbon intensity reduction target during the current Five-Year Plan period (2011-2015) is 21 per cent.

It is worth noting that the allowances are determined by emissions intensity rather than in absolute terms, meaning the government will review companies’ Industrial Added Value on an annual basis and increase or decrease the absolute emission allowance to maintain a fixed emissions-to-GDP ratio. Intensity-derived allowances are a novel concept and could hold lessons for other developing countries.

Some challenges

One of the main challenges that the ETS pilots face is their legal basis.

For energy conservation, the national Energy Conservation Law provides a solid legal basis for the government. The law allows the government to collect energy-related data and set conservation targets for enterprises, as well as to stipulate legal consequences for non-compliance.

The ETS pilots, however, are based on ordinances from local legislatures. As a result, the regulation has fewer teeth. Ensuring that there are strong, enforceable penalties for non-compliance will be important for the success of the program.

Data quality is another frequently cited challenge. The national government has not yet mandated a unified methodology to account and report greenhouse gas emissions. Although the ETS pilots are adopting internationally recognised greenhouse gas accounting and reporting frameworks, each ETS pilot is likely to develop similar but slightly different methodologies, making it more difficult to link between pilots or scale them up to the national level.

Furthermore, the ETS pilots are generally hesitant to put in place stringent data-quality requirements out of the fear that companies don’t have enough capacity. The fact that caps are derived from intensity targets adds another layer of uncertainty, as economic data such as Industrial Value Added may also be subject to manipulation. The pilots will provide an opportunity for China to address data quality issues.

Last but not least, the political will to reach the ambitious reduction target is yet to be tested.

Chinese officials have estimated China’s emissions will peak between 2030 and 2040. However, there are influential experts advocating for the 2025 timeline, and at least one ETS pilot is studying the possibility of peaking as soon as 2015.

Building support for the ETS pilots will come from showing that the pilot programs are compatible with economic growth, which continues to be a priority in China. In 2012, Shanghai’s economy grew its GDP by 7.5 per cent, which was the slowest economic growth of any pilot site. Four of the seven pilot sites had double-digit GDP growth.

While these are some of the obstacles to overcome, the ETS projects can offer a strong starting point for a market-based approach to constrain emissions in China. If successful, these pilots can then be scaled up nationally, and will help show that China is serious about tackling its emissions and addressing the growing threat of climate change.

Ranping Song is team leader of WRI China's climate and energy program.

This post originally appeared on WRI’s ChinaFAQs blog. - See more at: http://insights.wri.org/news/2013/08/inside-china%E2%80%99s-emissions-trading-scheme-first-steps-and-road-ahead#sthash.0kK5tXwl.dpuf
- See more at: http://insights.wri.org/news/2013/08/inside-china%E2%80%99s-emissions-trading-scheme-first-steps-and-road-ahead#sthash.0kK5tXwl.dpuf

This post originally appeared on WRI’s ChinaFAQs blog. Republished with permission.

- See more at: http://insights.wri.org/news/2013/08/inside-china%E2%80%99s-emissions-trading-scheme-first-steps-and-road-ahead#sthash.0kK5tXwl.dpuf

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Compare this to Tony Abbott's Direct Action Plan, capped at $6 billion with a totally inadequate target of reducing emissions by 5% by 2020. Together with his declaration not to spend a penny more, his do nothing approach shows Abbott and his team are in the pocket of the fossil fuel industry.

Given that China routinely steals IP even to the extent of taking over foreign factories, is notoriously corrupt and issues fantasies for statistics errr let's say I wish you luck for a functioning market with true price discovery.

Lucky it aint my money. But another casino for chinese it certainly could be.

Points of Information:

"This development is potentially a major marker in the country’s efforts to reduce greenhouse gas emissions."

I question if the measure is really about reducing greenhouse gas emissions in terms of part of a global effort to do so. Evidence suggests that the measure is more about trying to make air breathable and to increase visibility in their cities and this appears to be the driving motivation.

"China is committed to reduce its emission intensity by 40-45 per cent by 2020, and Shenzhen’s carbon intensity reduction target during the current Five-Year Plan period (2011-2015) is 21 per cent."

Wow this sounds like they are really going at it. That 21% sounds like it could be better than Australia's target of 5% absolute CO2 reduction from 2000 to 2020. A key point left out here is 'new units of GNP.' That is what their plan says. It does not say about existing units of GNP. Reduce carbon intensity of new units of GNP. That is where it is easiest to reduce as the new computer, copier, car, machinery etc. is usually more energy efficient than what it replaces.

China's economy could grow something like 460% between 2000 and 2020 and that is factoring 9% annual GNP growth, while its CO2 may easily grow something like 238% between 2000 and 2020. That compares to Australia's -5% CO2 target. It would take 470 Australias reducing 5% to compensate for China. If Australia maintains a 0% target for 2020 the share of our CO2 of the world will trend downward.

It's at least a start, a lot of sorting out and verification is needed, but at last they are making a start.
Tony wants to go backwards, why would anyone vote for a new leader to take us backwards? Our coat of arms bears 2 animals that are significant in what makes them Australian, the can't go backwards, that would make it unAustralian to vote for Tony to take up backwards wouldn’t it?
If our system is flawed, then fix it, don’t scrap it and start something different, that’s going backwards, come up with a way to make what we have work better. This is what Australians are great at, taking an idea and making it better.
So many years of negative Tony have really taken their toll of Australian, time to shake free from the repression, lift our heads high and make some thing of what we already have.

Thank you Terry for explaining what I believe too. I feel so uncomfortable at the way this election has become. Mr Abbott has a lot to answer for this as his demeaned attitude to Julia was so distructive and showed just how low he would go to disrupt Australian politics. He is not a kind man and will let us all down if he gets in. I believe history will show how he has spoilt very good policy's by playing to fear.