Published on January 6th, 2012 | by Ravinder Casley Gera1
Is China Preparing to Implement a Carbon Tax?
China’s airlines may be bristling over being forced to join the EU’s Emissions Trading Scheme, but it seems the Chinese government is still focused on its own emissions reductions plans — all the more so, we’d imagine, since they agreed to enter talks over joining a successor to the Kyoto treaty at the Durban conference last month. The People’s Republic recently increased its target for new installations of solar power by 50%, to 15 GW by 2015 (just a handful of months after it doubled the target from 5 GW to 10 GW). But this news could be much more significant: the Chinese government is reportedly preparing to implement a nationwide carbon tax.
The state news agency Xinhua announced the new policy yesterday. The plans are still being finalised, but are expected to come into force before 2015. The tax would be applied to the biggest consumers of fossil fuels, most likely energy companies and heavy industry — and, possibly, airlines. The tax would start at 10 yuan, about $1.50, per tonne of carbon dioxide emitted, but at some point that would rise rapidly.
To put that in perspective, carbon permits under the EU’s emissions trading scheme cost about $8 per tonne.
Strange that on the very day China’s airlines said they wouldn’t pay the EU’s carbon levy, their government looks set to impose its own. But the move wasn’t totally unexpected — as Reuters points out, China’s National Bureau of Statistics last year started developing a system to measure emissions by major industrial companies, an essential tool for implementing a carbon tax. We reported in April 2011 on China’s decision to start taxing energy-intensive industries, and Susan discussed China’s decision to implement a cap-and-trade program way back in June 2010.
The move will make China part of an elite club. Finland, Sweden, Norway and Australia are the only countries currently taxing carbon directly, although Ireland taxes oil and gas, and India taxes coal. (And, of course, Boulder, Colorado has a carbon tax on electricity.)
It’s the latest in a line of positive steps China’s government has taken in recent months to get its spiralling emissions under control. Its latest five-year economic plan, released last March, contained a slew of environmental targets and measures, including plans for 40 GW of new nuclear power, 120 GW of new hydropower and, most demandingly, a target to reduce the economy’s carbon intensity — the amount of carbon emissions per unit of economic growth — by 17%.
Of course, not all of that development is uncontroversial — in particular, China’s grandiose hydropower schemes have been criticised for their damage to the local environment. But if a carbon tax is implemented, it should shift the focus of carbon reduction efforts away from giant government projects and towards more efficient business. And given that China now accounts for more CO2 than the US and Canada put together, every bit of progress is to be welcomed.
For more on China’s efforts to green its economy, see China: Yet Another Strong Renewable Energy Push.