Climate change spurs carbon credit trading

Global collaboration on climate change has entered a new stage as challenges brought by global warming have become increasingly urgent, said Xie Zhenhua, vice-chairman of China's National Development and Reform Commission on Monday.

China is under growing pressure to cut greenhouse gas emissions, said Xie, who recently returned from ministerial-level discussions held during the ongoing Climate Change Conference in Bonn, Germany.

China must also conform to an internal timetable to switch from its high-carbon development model to a more sustainable path, as seen by the heavy smog blanketing many of its cities in recent years, he said.

The 12-day meeting in Bonn is viewed as an opportunity to make further progress and lay the foundations of reaching an agreement in 2015 to address climate change.

Xie said that from 2005 to 2013, China reduced the amount of carbon dioxide it burns per capita of GDP by 28.6 percent, the equivalent of a 2.5-billion-ton reduction in greenhouse gases.

Arduous efforts must be made to put the five-year targets on energy savings and emissions reduction within reach by 2015, he said. Measures include holding accountable local officials who fail to fulfill emissions reduction targets, and restrictions on new energy-guzzling projects will be strictly enforced.

"China will behave in a very responsible way for Chinese people and the world and the nation will try it best to peak as early as possible," Bloomberg quoted Xie as saying last week in Bonn.

The nation will rely more on market mechanisms in cutting emissions. China plans to set up a nationwide carbon emissions trading market in three years, Sun Cuihua, deputy director of the climate change department of the NDRC, said at the 5th Earth Temple Forum in Beijing on Monday.

"The establishment of an emissions-trading scheme needs a cap, but the item has various meanings－it could refer to an absolute cap, or caps on industries and companies, or growth caps," Sun said. "All those options are being studied ... It's still too early to talk about setting an absolute cap for national emissions trading in China," she added.

Experts sbaid it's a common practice to start a national market from imposing caps on carbon dioxide emissions from utilities and industry, as some regional pilot programs have done.

In South Korea, carbon dioxide emissions from power generators and manufacturers will be capped at 1.64 billion metric tons in the 2015-17 period, the country said last month.

"Experience both abroad and in China has proved that trading can only be effective under a robust cap, which contributes to and helps deliver the establishment of an economy-wide emissions management program," said Dan Dudek, vice-president of the Environmental Defense Fund, a United States environmental group.

Pilot trading projects have been ongoing in six cities and provinces in Beijing, Shenzhen, Shanghai and Tianjin and the provinces of Hubei and Guangdong since 2003. The southwestern city of Chongqing will be the latest region to launch carbon trading later this month.

"They are individual projects," Sun said. "Even if we expand the pilot projects to more regions, they are still not a connected and whole market, so it's not the most effective and rapid path to take."

The average trading price of carbon permits in the pilot cities and provinces range from 27 yuan ($4.4) in Tianjin to 70 yuan in Shenzhen.

Li Junfeng, director of the National Center for Climate Strategy and International Coordination, said the varying carbon prices indicate the regions' unequal stages of development and quota allocation systems.