China launched on Thursday its seventh and final pilot carbon market, ahead of a national scheme expected in 2018.
China is piloting emissions trading as one way to drive efficiency and carbon emissions cuts across its heavy industry, and so boost air quality and cut the country’s contribution to climate change.
The country has yet to decide whether it will pursue a national cap and trade scheme, where alternatives include a carbon tax or pollution limits.
The Chongqing scheme imposes an absolute cap on industrial emissions, at 125 million emissions of carbon dioxide, or 38 percent of the province total.
It regulates sectors including power, steel, aluminium, chemicals and cement.
The scheme takes the total allocated emissions permits, or allowances, among the seven pilot schemes to 1,240 million, second only to the European Union emissions trading scheme, with cap of nearly billion tonnes of CO2.
China’s planning ministry, the National Development and Reform Commission, recently updated traded volumes across the other six pilots until the end of May, showing wide variation, suggesting that some were faring better than others.
For example, Guangdong (launched last December) is by far the biggest pilot scheme, with a cap of 388 million tonnes of CO2, but has so far accumulated barely a third the traded volume of Shanghai (launched in November), which accounts for less than half as many emissions.
Emissions allowances were trading in within a fairly narrow price band, from 24 Yuan (2.9 euros) in Hubei province to 71 Yuan (8.5 euros) in Shenzhen.
China’s pilot carbon prices were very much in line, therefore, with EU allowances (EUAs), which were trading at 5.7 euros on Thursday.
The pilot trading phases of the regional markets end in 2016.
All seven provinces with the exception of Beijing and Shenzhen have an absolute cap on emissions, suggesting that the NDRC may be leaning towards a fixed carbon cap under a national scheme.
The alternative would be a less rigorous, intensity-based target as Beijing has established for national carbon emissions in 2020, based on emissions per unit of GDP and therefore allowed to grow with the economy.
China is presently lagging its 2020 carbon intensity target.
This article was produced by the RTCC