CHINA TO TEST CAP&TRADE

China sees emission trading pilot in next economic plan
Emma Graham-Harrison, September 28, 2009 (Reuters)

"China plans to include a pilot emissions trading system in its five-year plan for economic development until 2015…[though it is not yet clear] whether it would cover carbon dioxide.

"The government is already experimenting with small-scale schemes to tackle acid-rain causing sulfur dioxide and other pollutants using market mechanisms…[and has not stated] the potential for expanding these, or adding greenhouse gases to the list of pollutants that can be controlled and traded, but is apparently keen to at least continue exploring their potential."

China will soon be on the Big Board of emissions trading. (click to enlarge)

"A trial system for trading in permits to pollute was listed as one of four main emissions reductions goals in official comments about a blueprint for growth in China from 2011 to 2015, which bureaucrats are still thrashing out…The country's top climate change official, Xie Zhenhua, deputy head of the powerful National Development and Reform Commission, declined to clarify how large the trial would be, or whether it would cover greenhouse gases.

"China is now the world's top annual emitter, and President Hu Jintao pledged at the United Nations to take on a "carbon intensity" goal that would oblige it to cut the amount of carbon dioxide produced for each dollar of its economic output…[C]arbon traders hope this could pave the way for a market like the one currently used in Europe, and have been rushing to secure a potentially lucrative foothold in China even though it is unclear how easy it will be to make money there."

China is risking these price advantages to cut back its fossil fuel dependence and incentivize New Energy. (click to enlarge)

"The Chicago Climate Exchange (CCX), owned by UK-based Climate Exchange Plc, has signed a deal to set up a Chinese emissions exchange, but has declined to say how much it will invest or when trading might start.

"French emissions exchange BlueNext has taken steps toward a carbon trading platform in China, joining with the China-Beijing Environment Exchange to offer clients a database of Chinese carbon-cutting projects and a carbon market standard."