China’s giant carbon market begins trading
The groundbreaking ceremony for China’s National Carbon Market takes place in Wuhan, central China’s Hubei Province, on July 16, 2021. (Photo provided to chinadaily.com.cn)
The inauguration of China’s national carbon market – the largest in the world – will not only help accelerate the national carbon reduction process, but also promote a global response to climate change, international experts said.
The first transaction took place at 9:32 a.m. shortly after the market opened on Friday, as a China Daily reporter found in Hubei provincial capital Wuhan, where a launch ceremony took place.
The China Hubei Emission Exchange in Wuhan is designated to process inquiries and collect data for the market.
The market now includes more than 2,000 companies in the power generation sector, and it will be expanded to include seven other major carbon-emitting industries, such as steel, chemicals and papermaking.
Covering more than 4 billion tonnes of carbon dioxide per year today, the market has already replaced the European Union’s carbon emissions trading program to become the largest in the world.
Carbon trading is the process of buying and selling permits to emit carbon dioxide or other greenhouse gases. Designated emitters will have the right to release a certain amount of greenhouse gases. At the end of each cycle, issuers will be required to purchase unused permits in the market if they issue more than the amount granted to them.
Fred Krupp, chairman of the Environmental Defense Fund, said China’s national carbon market will be one of the main policy instruments to meet its targets of peaking carbon dioxide emissions by 2030 and achieving carbon neutrality before 2060.
With the first transactions taking place in the system, China has taken an important milestone in its progress on climate action, he said.
“A well-functioning carbon market will contribute to a lower peak and a faster reduction in emissions thereafter,” he added.
Krupp said the market is also a sign of China’s full commitment to participate in global climate governance.
Denis Depoux, global managing director of consultancy Roland Berger, said the establishment of the national carbon trading program will highlight China’s leading role in promoting the response. global climate change.
“The successful practice of China’s carbon trading market will also explore a low-carbon green development path that uses market means to boost economic development,” he said.
Depoux pointed out that the price discovery function can put pressure on the transformation of energy-intensive industries, while providing a clearer expectation of ROI (return on investment) for the development of low-carbon technologies. .
In the last phase of the 14th Five-Year Plan period (2021-25), the other seven major carbon-emitting industries are expected to be gradually included in the market, “making the carbon emissions trading mechanism a key policy tool for achieve carbon emissions. reduction targets, ”said Thomas Luedi, senior partner at Bain & Co in Shanghai.
As more renewable energy sources are used for power generation, Bain expects the proportion of China’s non-fossil energy production to rise to around 45% by 2030 That number was around 30% last year, according to the National Energy Administration.