Monday, May 16, 2016

Carbon Trading in a Non-Market Economy:  China Dives In

Inside the China Beijing Environmental Exchange office. China next year is expected to turn pilot carbon-trading programs in seven cities into a nationwide emissions trading system, the largest the world has ever seen. (Photo Credit: AP Images) Click to Enlarge.
Data drought a handicap for some, a boon for others
China has announced that in 2017, it will launch a national cap-and-trade program involving six of its largest carbon-emitting industrial sectors, beginning with coal-fired power generation.  The effort borrows ideas from the U.S. acid rain program and has learned lessons from the European Union and also from California's efforts to put an economy wide cap on its greenhouse gas emissions.

Some of China's lessons have come from pilot programs where governments and companies have tinkered with cap and trade in two provinces and five cities.
China turns the tables on Congress
Henry Jacoby, a professor of applied economics at MIT, warns outsiders not to expect miracles, but he thinks central planners are beginning to ask the right questions.  Running their economy is no longer just a matter of maintaining control.

"China is a complicated place.  You need to know how things actually work in the provinces," he said.  One of the reasons for using more market tools, Jacoby thinks, is that "they're trying to use this to get under control some of the big old rust-bucket industries they've got."

Dan Dudek, an agricultural economist and vice president of the Environmental Defense Fund, who has devoted a major part of his career to encouraging China to use markets to find ways to reduce energy needs, remains optimistic that it has become painfully aware of the limits of regulations.

"It's really difficult telling people what they must do at individual locations," he said.  Dudek thinks it would take some 20,000 planners, a virtual army of government engineers, to sit down and "figure out, 'OK, what's the best control technology for every [greenhouse gas] source category?'"

He says there is now "a lot of design work" underway to structure markets to reveal that.  There is also a lot of local tinkering going on so Chinese companies can find the answers themselves. Local governments have begun to look at major energy waste by small businesses, such as companies in China's sprawling textile industry.

Read more at Carbon Trading in a Non-Market Economy:  China Dives In

No comments:

Post a Comment