Skepticism puts a damper on China's carbon market ambition

By Wang Cong Source:Global Times Published: 2017/12/26 21:48:39

Details need to be worked out, but enforcement is key: experts

A farmer works the field near an industrial plant in Dezhou, East China's Shandong Province. Photo: IC

Since China announced its intention to establish what could be the world's largest carbon trading market last week, the international response has changed dramatically. Initial praise for the plan to tackle climate change has turned into raging skepticism about the feasibility and the effect on the environment.

Doubts have accumulated on the basis that a fully operational carbon market could be between two to three years away and that strict enforcement and monitoring will be challenging even when the market is well established. Nonetheless, experts and observers agree that a comprehensive approach to climate change is necessary, and a step better taken sooner than later.

After years of discussion and testing, the National Development and Reform Commission (NDRC), China's top economic planning agency, released details of the plan for a national carbon market on December 19.

The NDRC expects the carbon market to begin in power generation, an industry of 1,700 companies and collective carbon dioxide emissions of 3 billion tons. It will take about a year to set up a nationwide data collection system and another year for simulated trading to check feasibility and effectiveness.

Given the size of the carbon trading market in China, the announcement initially drew widespread praise from media outlets and the support of prominent environmental advocates such as former US Vice President Al Gore.

"China's move to create the world's largest carbon market is yet another powerful sign that a global sustainability revolution is underway," Gore said in a statement on December 19, adding that the world is at a "tipping point in the climate crisis."

Commitment at a cost

However, over the past week that initially positive reaction has turned cold as skepticism about the feasibility of the plan grows.

"The policy is still missing some crucial features that will determine whether it will be a success," Emil Dimantchev, a climate and energy policy researcher at Massachusetts Institute of Technology, tweeted on December 19. "In the absence of clear signals that China is serious about carbon pricing, we have strong reasons to be skeptical."

Dimitri de Boer, vice chairman of China Carbon Forum (CCF), told the Global Times on Tuesday that China faces two main challenges in implementation of the carbon market. The first and most important is the need for capacity building by all carbon market stakeholders, especially the emitting businesses, but also local officials and the third party verifiers. The second is the lack of a legal framework for the plan to be implemented and enforced. CCF is a group in Beijing that monitors emissions trading.

 "We realized after two years of pilots that setting up such a market on the scale we envisaged is a very complex process," said Yang Fuqiang, senior advisor on climate and energy to the Beijing-based consultancy Natural Resources Defense Council.

Proper mechanisms are needed to monitor companies and prevent them from falsifying emission data. Sanctions must be established to deal with those that fail to comply. "All of these take time," he told the Global Times.

Tian Yun, director of the Macroeconomics Research Center's China Society, said that getting everything up and running in such a short time would be a considerable achievement, but that China was ready to meet the challenge.

"Yes, there is a lot of work to be done and a lot of reasonable skepticism about how successful we're going to be, but no one is questioning our determination to become a world leader in carbon trading," Tian told the Global Times on Tuesday.

Tian, who advises government officials on macroeconomic policy, said that a carbon market was primarily focused on tackling climate change, a problem China cannot solve alone.

The mere decision to establish a carbon market has already put great pressure on companies to cut emissions, according to Yao Fuming, general manger of coal-trading platform under the China Guodian Corp'a Dadu river hydropower project based in Chengdu, Southwest China's Sichuan Province.

"During the pilot period, different places had different quotas and standards. Trade was minimal and the effect not very apparent… but with a nationwide platform and uniform standards, motivation to cut emission should increase," Tao told the Global Times on Tuesday.

Newspaper headline: Skepticism cools China’s carbon hopes

Posted in: ECONOMY

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