December 21, 2017 Read More →

Evolving Policy in China Focuses on Clean Energy Incentives

New York Times:

China released plans on Tuesday to start a giant market to trade credits for the right to emit planet-warming greenhouse gases. The nationwide market would initially cover China’s vast, state-dominated power generation sector, which produced almost half of the country’s emissions from the burning of fossil fuels last year. If it works as intended, an emissions market will give Chinese power companies a financial incentive to operate more cleanly.

The long-awaited announcement could bolster global efforts to combat climate change after President Trump signaled this year that the United States would back away from Obama-era promises to curb emissions. It could also serve as a big — though ultimately government-controlled — laboratory for such carbon markets, after earlier efforts in Europe and at the local level in China stumbled.

The government did not issue a hard timeline, and regulations and other details still have to be worked out. But environmental groups that worked with the government said they could emerge in the next couple of years. “Everything is gradual, step by step,” said Li Junfeng, a senior government adviser on the carbon market plan.

China’s announcement could also disappoint those who were hoping the long-promised emissions market would cover the country’s broader economy, the world’s second largest after that of the United States. China’s booming car culture, its industrializing agriculture sector and its huge chemical complexes, cement factories and steel mills are also big emitters.

Still, environmental groups welcomed the move. Nathaniel Keohane, vice president for global climate at the Environmental Defense Fund, said the market for power-sector emissions alone would cover 3.3 billion tons of annual carbon dioxide releases. The European Union’s trading system encompasses about two billion tons of emissions.

“This is like the Mount Everest of climate policy,” Mr. Keohane said. “It’s an incredibly ambitious undertaking.”

China is reacting to pressure at home and abroad to clean up its act. Rising sea levels could devastate its heavily populated coast. The Chinese public is increasingly worried about broader environmental issues like urban smog, water quality and soil pollution.

China has invested heavily in green technologies such as electric cars, wind turbines and solar panels.

China’s emissions of greenhouse gases from the burning of fossil fuels like oil, coal and natural gas have nearly tripled since 2000, according to data from the International Energy Agency in Paris. The high tonnage partly reflects its huge population; Chinese emissions per person are still somewhat less than the average per capita figure in the United States, although the gap has been narrowing.

Making solar panels in Hefei, China. The country has invested heavily in green technologies like electric cars, wind turbines and solar panels. Credit Adam Dean for The New York Times

Under emission markets, power companies and others effectively pay for the right to pollute beyond a government-mandated limit. Those that cut their emissions could sell permits to pollute to dirtier companies, ideally at a healthy price.

So far, such efforts have been underwhelming. Markets in Europe and at the provincial level in China have faltered because the authorities issued too many credits to existing polluters. That gave companies little reason to buy credits, or to cut their own emissions and sell the credits.

More: China Unveils an Ambitious Plan to Curb Climate Change Emissions

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