Heavy smog over Beijing International Airport in December 2016. The aviation industry may also be included in China's carbon-trading market. Photo: Andy Wong / Associated Press

By Chris Buckley
23 June 2017

BEIJING (The New York Times) – As other countries look to China to take the lead in fighting global warming after President Trump’s rejection of the Paris climate agreement, President Xi Jinping is pushing ahead with an ambitious plan to build the world’s largest market for carbon emissions permits.

The start of a national carbon trading market in China by late this year has been years in the making, but is now shaping up as Mr. Xi’s big policy retort to Mr. Trump’s decision to quit the Paris accord. The Chinese government said in a greenhouse gas policy guide released on Wednesday that the 2017 start was on track.

“Carbon trading on a national scale will send a signal to the world that China is serious about this,” said Wang Yi, a professor at the Chinese Academy of Sciences in Beijing who also belongs to the national legislature and advises the government on climate policy.

But this is a high-visibility, high-stakes gamble for Mr. Xi. He seems eager to take the initiative from the United States on trade, multilateral cooperation and climate change. His record on the environment and market reforms, though, is mixed, and China’s carbon trading plan is not a sure bet to succeed.

Europe and California already use this cap-and-trade approach, which sets a ceiling for greenhouse-gas emissions and allows businesses to buy and sell emissions permits in the hope of unleashing market competition to save energy and embrace clean technology. But no one has tried this on the scale the government envisions for China, the world’s leading source of carbon emissions. […]

Moreover, China has a huge industrial sector dominated by state conglomerates that can outgun regulators and ignore laws. Officials habitually meddle in markets. Local protectionism often stymies domestic competition, and pollution and energy data can be unreliable or outright fake.

“One of the problems they have had is getting realistic numbers,” said Deborah M. Lehr, a senior fellow at the Paulson Institute who has advised Chinese officials on climate-friendly financial policies. “To move to emissions trading, you need to have realistic numbers on how to start to price these emissions.” […]

“It’s a good idea to start with a narrow range of sectors, even if that wasn’t the original plan,” said Stian Reklev, a Beijing-based co-founder of Carbon Pulse, which provides information on greenhouse gas markets and climate change policy.

“It’s still going to be a massive challenge to make it work,” he said. “Anyone who thinks that the Chinese scheme will be effective in making big cuts in emissions from the start is going to be disappointed.” [more]

Xi Jinping Is Set for a Big Gamble With China’s Carbon Trading Market


  1. Anonymous said...

    Carbon trading = license to pollute. Borrowing from Peter to pay Paul, while still doing almost nothing to stop burning fossil fuels.

    It's never going to work - i.e., another false narrative. This is the "best" humanity seems willing to do - go on deceiving themselves and pretending that this "will make a difference". It won't.  


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