On June 17 of this year, Shenzhen, a special economic zone in China, will begin operation of its first emission trading market. Shenzhen’s carbon market is the first one from a series of 7 planned regional carbon markets to be put in place in China. Beijing and Shanghai may also start their carbon markets sometime in June; however, a specific date for the markets to begin business has not been put in place.
Shenzhen, a main city in Southern China, is a mayor financial center and home to the Shenzhen Stock Exchange. Shenzhen once known for being a small village near Hong Kong is now a modern city as a result of its vibrant economy made possible by ever growing foreign investment. The city’s carbon market will include 635 companies in total. According to New Energy Finance, an organization that specializes in providing financial information, these companies discharged 31.7 million tonnes of greenhouse gases in 2010.
Instead of placing a countrywide carbon market, China decided to focus on regional markets first with the goal of linking them in the future. Regional carbon markets have been designed to accommodate local characteristics and necessities. Guangdong’s market, for example, is a manufacturing hub. The emission trading market in the region would only charge factories for carbon dioxide emitted, while Shanghai’s system would charge airports, office buildings and other major emitters. Overall, China has pledged a 17 percent cut in emissions per unit of economic output by 2015, compared to 2010 emission levels, and has assigned emissions reduction targets to each region. Each region has translated their target to specific quotas that limit what individual polluters can emit.
A report published last year by the Climate Institute, an Australian think tank, stated that China will become the second largest carbon market in the world in terms of regulated emissions, covering 700 million tons of emissions by 2014. In contrast, the report notes, that the carbon markets in California, Australia and the European Union will cover 165 million tons, 382 million tons and 2.1 billion tons, respectively showing a stark difference.
Pilot programs for carbon trading are also scheduled to open this year in Guangdong, Tianjin, Chongqing and Hubei.
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