China's first trading emissions scheme begins19th Jun 2013
With the support of Australia, China has launched its first carbon emissions trading scheme.
It launched on June 18 in Shenzhen, one of the business powerhouses of the nation with a population of approximately 10 million people, and an economic output of $150 billion.
It's hoped that with the implementation of a carbon tax, much like in Australia, the uptake of renewable and efficient technologies such as solar power will increase. This is because paying for each tonne of carbon emitted provides a good financial incentive to lower emissions and increase energy efficiency in order to low the cost of the carbon tax bill to a company.
Around 630 industrial companies will be affected by the pilot emissions trading scheme. These companies are responsible for a hefty 38 per cent share of the city's greenhouse gas emissions.
Companies will face heavy charges if they fail to secure the adequate permits for their emissions, and consequently will be charged three times the market price for permits. Monitoring and reporting systems are in place to ensure compliance.
Permits will be available freely at first, but over time the process will move to full auctioning of permits whereby the market sets the price.
As the year progresses, further trading schemes will be initiated in other cities, including Beijing, Tianjin and Shanghai. A national scheme is planned for after the year 2015.
The scheme's goal is to reduce Shenzhen's carbon intensity by 21 per cent on 2010 levels by the year 2015.
"China's plans to expand these pilot schemes into a nation-wide trading scheme will add to the strong growth of global carbon markets," said Greg Combet, Australia's minister for climate change, industry and innovation.
Mr Combet congratulated his Chinese counterpart, Xie Zhenhua, on this carbon pricing mechanism milestone, which has been heavily inspired by Australia's own.
He said that China's actions show that as the world's largest greenhouse emitter, the nation is serious about cutting their emissions at the lowest cost possible, which is through a market mechanism. China is also Australia's largest trading partner.
Australia's carbon pricing mechanism has provided much revenue being pumped back into renewable energy generation, clean technology and energy efficiency schemes to further reduce the intensity of carbon emissions being released into the atmosphere.
Posted by Bob Dawson