File photo: IC
A nationwide carbon trading platform will soon be launched in a move to cut China's carbon dioxide emissions, with top policymakers reviewing a final plan submitted by the country's top economic planner.
But no specific details including the launch date have yet been announced and experts said on Thursday that although the Chinese government has persisted with plans for the platform, challenges still loom and a launch date beyond this year is likely.
The State Council, China's cabinet, is reviewing the final draft of the plan submitted recently by the National Development and Reform Commission (NDRC), the Beijing-based Science and Technology Daily newspaper reported on Thursday.
The newspaper said that the planned trading platform may include as many as 8,000 companies in eight industries such as petrochemicals and coal. Carbon emissions from those companies account for 40 percent to 50 percent of the country's total, according to the report, which also said that the market for carbon quota trade could be worth as much as 120 billion yuan ($18.1 billion) annually.
"The submission of a draft plan to the State Council indicates that relevant preparation work for officially launching the nationwide carbon trade market has been completed," Zhou Dadi, a research fellow at the Energy Research Institute of the NDRC, told the Global Times on Thursday.
Zhou said that trial programs of carbon trade in seven provinces showed "some success" and that a final mechanism on a national scale has been designed from those programs.
China has been testing a carbon cap-and-trade system since 2011 in seven provinces and municipalities, including Beijing, NDRC official Li Gao, said in a press briefing on October 31.
The tests covered 3,000 companies with the total trade of carbon quotas worth 4.5 billion yuan, according to Li.
Talk of a nationwide carbon trade system picked up further in China after the Paris Agreement was reached in 2015 to curb greenhouse gases. China and the US formally ratified the pact in September 2016 on the sidelines of the G20 meeting in Hangzhou, capital of East China's Zhejiang Province.
Under the agreement, China needs to cut its carbon emissions per unit of GDP, a measure known as carbon intensity, by 60 percent to 65 percent by 2030 compared with 2005 levels, according to the Xinhua News Agency.
Lin Boqiang, director of the Center for Energy Economics Research at Xiamen University, said that China is determined to cut carbon emissions both to fulfill its commitment to the international community and to address its own environmental issues.
"There is no question about the government's determination to launch this carbon cap-and-trade system; however, this is not an easy thing to do. It requires a lot of work," Lin said.
Lin pointed out that the plan will involve many industries and companies, and it will have to come up with a fair standard for all these companies in terms of carbon emissions quotas.
"Many of these companies have different operational conditions, so it's extremely hard to come up with a nationwide standard," Lin said.
In addition, the plan also involves local governments, "so there is a lot of coordination needed to ensure smooth and normal trade," Lin noted. If the system isn't well planned it won't work, which would undermine the goal of curbing emissions. A failure would also hurt the companies, he said.
Zhou of the Energy Research Institute also pointed out the challenges of ensuring that companies strictly follow the rules and comply with the cap.
"It is a huge amount of work to evaluate a company's compliance and make sure its operations and relevant trades are transparent," he said.
Given such difficulties, Lin speculated that the launch of the nationwide carbon trade platform could be extended to next year.
"We only have a little over a month left in this year, and I doubt they could get this whole thing up and running within this time. I think it's more likely that we see the launch in the first half of next year," he said.