China carbon market: A game changer years in the making
Yes, China is serious about climate action. The nation of 1.4 billion – the world’s most populous and No. 1 greenhouse gas emitter – took a giant leap forward today when announcing it will roll out a national carbon market in 2017.
The cap-and-trade market will build on a series of successful pilot projects that Environmental Defense Fund helped design, using a proven market-based solution to tackle the greatest environmental and economic challenge of our time – global warming.
It also builds on the new cooperation on climate issues between the United States and China. Gone are the days when the two largest polluters used each other’s inaction as an excuse to delay cutting emissions.
After the joint climate announcement last year by Presidents Obama and Xi Jinping, a new dynamic of positive reinforcement has emerged. And the timing of China’s announcement today is crucial.
More than 190 countries meeting in Paris in December to try to reach a new international agreement on climate change.
While a United Nations agreement will provide the framework that allows countries to announce, implement and report on emissions targets, national policies such as those the U.S. and China have announced this year will be the main driver of climate action globally.
Having the world’s two largest emitters and largest economies not just taking steps to reduce emissions, but acting in close collaboration at the highest level of government, will raise ambition globally in Paris and beyond.
It will also help advance clean energy markets and the innovations needed to make such markets thrive. When the U.S. and China accelerate the adoption of clean and low-carbon technologies they send a powerful market signal to industry, investors and entrepreneurs.
Carbon market idea hatched in 1990s
EDF has been working in China since 1991 and conducted the first voluntary carbon trades with a multinational company seeking to offset emissions from its operations in China.
The efforts built on a successful model the United States used to reduce acid rain, and later expanded into seven pilot projects for which our China team provided key technical assistance. The pilots now cover 250 million people and have reported a total reduction of more than 10 million metric tons of climate pollutions.
“We are learning from our carbon emission trading pilots,” Su Wei, China’s chief climate change negotiator, noted last week. “A market can turn challenges into opportunities.”
In addition to planning for a national market to reduce emissions from industry, policymakers are in the midst of developing a first-of-a-kind cap-and-trade system to rein in transportation emissions in the city of Shenzhen.
And just last week, leaders from major U.S. and Chinese cities and provinces announced plans to peak and mitigate emissions.