This year, two of China’s biggest cities begin pilot cap-and-trade programs.
A logical question to ask is whether China’s program will face the difficulties of the biggest carbon trading platform in the world – in Europe. It has struggled since its beginning in 2005, giving skeptics plenty of room for criticism. But that struggle was self-inflicted – they bowed to industry pressure and gave out far too many free permits, leading to the current crash in prices.
China plans to go full steam ahead, said Xie Zhenhua who is in charge of the country’s climate policies, at an event in Beijing. Reuters covered the event:
This will not deter China, said Xie. Addressing longstanding inefficiencies and environmental issues are now a "domestic requirement" and don’t depend on other nations, or even on the state of the economy.
"China has pledged these targets to the international community to deal with climate change and they will not change. Even if other countries say they will do nothing, we will keep to our strategy. No matter what happens to our economy, we cannot make any change."
For the next few years, China will establish its own carbon trading program, but after that it will look to link with other programs, which are also developing now in Australia, Mexico, South Korea, California, Quebec and British Columbia.
China plans to learn from Europe’s mistakes. Shanghai’s pilot, for example, includes a mechanism where carbon credits can be withdrawn from the market if supply gets ahead of prices.
This week, Europe’s carbon prices reached record lows of $3.21 per ton of carbon, down from over $19 two years ago.
The
problem is the recession. Since 2008, companies have been producing less emissions because production is down, which means supply of permits far outweighs demand, crashing prices.
Learn more about Europe’s situation:
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