China to Quickly Expand Top Carbon Market to Add More Polluters
(Bloomberg) -- China is aiming to rapidly expand its national carbon market to add more heavy polluting industries once the system begins trading this month.
Authorities will quickly work on setting emissions accounting rules and on guidance for pollution rights for industries beyond the power sector, the first to be covered under the initiative, Vice Minister of Ecology and Environment Zhao Yingmin told reporters Wednesday in Beijing.
The trading system, which initially covers more than 2,200 companies in the power sector accounting for about half of China’s emissions, is on track to start operations this month and will commence soon, Zhao said, without confirming a specific date. Trading is scheduled to begin Friday, people familiar with the details said Tuesday.
Even though the market will immediately become the world’s largest emissions trading system, expectations are low that it’ll have any quick impact on helping China meet climate targets. There’s also potential that a surplus of permits will mean even power generators who pollute too much will be able to buy them cheaply and won’t have a real incentive to cut emissions, according to some analysts.
Pilot systems in a number of provinces have priced carbon at about 40 yuan ($6.18) a metric ton, according to Zhao. That’s only a fraction of the rate in the European Union, which currently hosts the largest market, and where benchmark futures traded at a record 58.64 euros ($69.45) on July 1.
“It’s not good to have either too high or too low a carbon price,” Zhao told reporters. “We need a reasonable price to show both China’s determination to peak carbon emissions and reach carbon neutrality, and to give positive messages to enterprises that commit to cut emissions.” A total of 480 million tons of carbon dioxide equivalent had been traded under the pilot systems by the end of June, he said.
The Shanghai Environment and Energy Exchange, which is hosting the national market, has previously said it expects China’s trading system will eventually cover as many as 10,000 entities accounting for about 5 billion tons of carbon dioxide emissions.
China’s ecology and environment ministry is also moving to strengthen punishments for data fraud in the carbon market, and has trained over 6,000 people across local government and within industries about quota allocation, Zhao said.
The trading program was announced more than three years ago and has encountered a series of delays. China missed an earlier government target to start trading by the end of June.
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