China to replace Europe as world’s biggest carbon market

The world's second largest economy is planning to roll out a national market for carbon permit trading in 2016, according to officials. 

 

The rules for the market are currently being finalised and, if all goes to plan, within a few years China will replace Europe as the world's biggest trader in emissions. 

 

China is responsible for 30 per cent of the world's greenhouse gas emissions, making it the world's biggest contributor to climate change. By 2020, it has pledged to have reduced the amount of carbon it emits per unit of GDP to 40-45 per cent below 2005 levels.

 

The graph below shows the ten countries that emitted the most carbon dioxide in 2012, according to data from the Electronic Data Gathering, Analysis, and Retrieval system (EDGAR).

As you can see from the graph, China emitted over three times more than any other country during that year. The new market would cap carbon dioxide emissions from a range of source including electricity generators and manufacturers, and those who go over their cap would have to buy permits in the market.

 

"We will send over the national market regulations to the State Council for approval by the end of the year," said Sun Cuihua, a senior climate official with the National Development and Reform Commission (NDRC).

 

Seven regional pilot markets have already been launched in a bid to gain experience in advance of the roll out. It is expected that these pilot schemes will attract professional trading companies to boost liquidity.

 

With the new market, China would become the main trading hub in Asia and the Pacific, where currently  Kazakhstan and New Zealand operate similar markets. 

 

Others planning to launch new carbon markets include South Korea, Indonesia Thailand and Vietnam.