China to Create Carbon Market and Cap Emissions

On Wednesday, a Chinese government official said that China plans to launch the first stages of a national carbon market next year.  According to the South China Morning Post, Jiang Zhaoli, a senior official with National Development and Reform Commission’s (NDRC’s) climate change department, said that China plans to initially cap emissions from six industrial sectors.  These include power generation, metallurgical, nonferrous metal, building materials, chemicals, and aviation.

“We hope to kick off the national market in summer of 2016, starting with a three-year trading phase before the market becomes fully functional in 2019,” said Jiang.

The plan, which still requires further approval from authorities, would also act to integrate China’s seven existing regional markets into a nationwide trading scheme.  As Reuters reported this week, the lack of an overarching system for China’s nascent carbon market has caused dramatic variations in prices between regions.  In January China launched a national carbon offset registry to try and create a market to transfer credits between the pilot trading schemes, another move toward a national market.

Ever since China started launching regional markets in 2013 there has been discussion about a national market, which could eventually dominate the international scene and act to both limit China’s dirty fossil fuel emissions as well as strengthen global efforts to put a price on carbon.  The approach of the United Nations’ climate talks in Paris at the end of 2015, where leaders hope to reach a new global treaty, amplifies the significance of any actions toward mitigating GHGs that China takes this year.

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