China, the world’s largest CO2 emitting country, is one step closer to capping its pollution as the first pilot carbon market in Shenzhen started operations today. The seven other trading schemes of Beijing, Shanghai, Guangdong, Tianjin, Chongqing and Hubei will start operations later this year. In total, China’s 7 pilot projects are set to regulate 800 million to 1 billion tons of emissions by 2015. China’s National Development and Reform Commission will oversee emission exchanges and monitor prices.
The Shenzhen pilot will include 635 companies of the region which account for 26 per cent of the city’s GDP adding up to 30m tonnes of CO2 per year. The firms that participate in the Shenzhen pilot project have been allotted permits for total emissions of 100m tonnes between 2013 and 2015. Ideally, firms will reduce their carbon intensity by 7 per cent over the next two years.
Experts believe that the Shenzhen scheme, as well as, the other regional pilots can achieve limited results due to the lack of a nationwide legal framework. Energy economist at Xiamen University Lin Boqiang said, “progress will depend on the government’s determination.” “Unless the government sets up a binding framework, it will be very difficult to determine fair transactions, and trading will be hampered,” Lin added.
On 2015, the government will decide whether China has the capability to run a nationwide carbon market.
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