After years of waiting, trading in CO2 emissions has started in China in the fight against climate change. The program aims to help the world’s second-largest economy reduce emissions and meet the climate targets set by State and Party leader Xi Jinping in a speech at the United Nations last year. In other words: China’s carbon dioxide emissions will peak in 2030 and by 2060 at the latest, according to Xi’s ambitious goal, the People’s Republic must not produce more CO2 than is broken down. by the natural photosynthesis of plants. According to a study by the American think tank Rhodium Group, China currently emits more greenhouse gases than all the developed countries combined.
Several Chinese cities and provinces had already started trading emission rights as part of pilot projects in 2013. At the end of 2015, when the Paris Climate Agreement was signed, President Xi promised to implement place an energy exchange.
When trading began in Shanghai on Friday, a ton of greenhouse gases cost 48 yuan (about 6.30 euros) and reached 51.23 yuan. On the first day, certificates worth 210 million yuan were exchanged. Compared to European emissions trading, Chinese entry prices remain very moderate. A tonne of carbon dioxide costs on average nearly 50 euros in Europe.
In the first phase of the world’s largest emissions trading system, more than 2,000 Chinese power plants are included in the program. They are responsible for four billion tonnes of carbon dioxide emissions per year. This represents about 40 percent of the People’s Republic’s total emissions. Energy sector emissions data are relatively easy to collect and verify compared to other industries that have more complex production processes.
In the medium term, Beijing leaders want to expand trade to other emissions-intensive industries, including the petroleum sector, chemicals, paper production, steel production and the aviation sector. . A precise timetable is not yet known. It is also unclear when and if financial institutions or individual investors are allowed to purchase certificates; institutional investors will be included as soon as the negotiation mechanism is fully developed.
The principle works in a similar way to Europe: with CO2 certificates, companies acquire the right to emit greenhouse gases. The aim is to create an incentive to invest money in climate-friendly modernization of factories. As in the EU, the Chinese government distributes a number of quotas to companies free of charge. Those who need less CO2 than allocated can sell the excess emission allowances, but those who emit more must buy more.
However, there are also gradations: while energy companies must purchase certificates for their coal-fired power plants if the specified limit values are exceeded, operators of gas-fired power plants can sell emission rights, but are not. forced to buy certificates themselves if they emit more carbon dioxide than what was initially allocated. The aim is to promote gas-fired electricity as a transitional technology in the People’s Republic.