Published on September 21st, 2012 | by Silvio Marcacci2
China to Create Emission Trading System, Link to European Union
China, the world’s largest emitter of carbon dioxide, has signed a financing deal with the European Union to reduce greenhouse gases through a variety of projects, including developing an emission trading system to link with the EU’s Emission Trading Scheme (ETS).
This agreement, announced yesterday at an EU–China summit, includes €25 million ($32 million) in financing and technical assistance for three sustainability and waste reduction pilot projects over four years.
Reducing Emissions, Pollution, Waste
The centerpiece of this deal is unquestionably the effort to design emissions trading systems across China, which could lead to a national program that would then be linked to the EU’s existing ETS. China has already planned trial carbon trading projects in several of its provinces, and recently set targets to reduce CO2 emissions per unit of gross domestic product 17 percent by 2015 compared to 2005 levels.
In addition to technical assistance designing an emissions trading system, the EU will also help fund efforts by Chinese cities to improve their resource-use efficiency, reduce heavy-metal water pollution, and implement sustainable waste treatment systems.
A Win-Win Deal?
The deal appears to be a win-win outcome for two of the world’s most important players on a global emissions treaty. China’s CO2 emissions have spiked with economic growth, and it now has higher per-capita emissions than the EU and greater overall emissions than the US. The country also recently announced $372 billion in funding to reduce air pollution and lower energy consumption.
The EU’s ETS, which China would ostensibly model its trading system after, has been attacked by China for including aviation emissions from foreign airlines. In turn, the EU has sought links to other international emissions trading systems to boost prices in its scheme, which have fallen to record lows, and recently agreed to link with Australia’s carbon trading system by 2018.
As the Kyoto Protocol approaches its conclusion and United Nations climate change negotiations stagnate while global emissions hit record highs, setting up a Chinese emissions trading system and including it in a growing international scheme could be a major step toward resolving opposition to a global greenhouse gas agreement.
“Needless to say, it makes a significant difference when China wants to use carbon markets to reduce emissions cost-effectively and boost low-carbon technologies,” said Connie Hedegaard, EU Climate Action Commissioner. “It’s an important step for an ever closer cooperation toward a robust international carbon market.”