Carbon Pricing & Trading News from Australia, California, China, South Korea, & More
Consideration of carbon pricing and trading, a market-based (not regulation-based) approach to addressing global warming, may still be outlawed by GOP leadership in Congress, but countries around the world (and even several US states) keep moving forward with planned or existing carbon pricing and trading programs. Below is some of the latest news from this arena.
Australia
Australia’s Federal Treasury recently announced that it expects the Australian government will raise A$24.7 billion under the carbon pricing mechanism, which is set to launch on July 1, 2012.
About 300 companies will face a carbon tax of A$23 per tonne of carbon emissions starting on that date, and the tax will increase by 5% a year until 2015. “From 2015, the carbon tax regime will be replaced by a cap-and-trade mechanism which will have a floor and ceiling price for the first three years,” Climate Connect notes.
The Australian government also recently announced that landfill projects which reduce carbon emissions will be eligible to claim carbon credits.
And, Greg Combett, Climate Change Minister for Australia, has expressed hope that Australia’s carbon emissions trading schemes will eventually be linked with China’s And South Korea’s.
“In the Asia-Pacific region there is scope in the years to come for us to develop quite an integrated approach,” Combett said. “A common carbon price could evolve from that, between our economies, which removes any issue of competitive disadvantage. And this is why I’m putting effort into this particular issue in China and Korea at the moment.”
California
An updated draft of California’s cap-and-trade regulations out last week includes language, for the the first, that opens the door to connecting the California carbon market with a carbon market in Quebec, Canada.
“The draft language called for the mutual acceptance of compliance instruments like allowances and offset credits between the two jurisdictions,” Rory Carroll of Reuters reports.
“It also called for a common allowance registry and auction, and included provisions for tracking allowances which are designed to enhance market security.”
California Air Resources Board (ARB) Chair Mary Nichols notes that there has always been the intention to link the California program to other programs, and that doing so offers the most benefit to California.
South Korea
South Korea recently approved a national emissions trading scheme. 148 out of 151 voting lawmakers voted for the scheme despite strong industry opposition (my, what a different political system they must have!).
More from Reuters:
Analysts and officials said the program won approval, despite fears it would hurt the economy, because of the long-term benefits to the country’s huge conglomerates from being more energy-efficient and exporting greener goods.
The scheme has not generated the same bitter public debate as in Australia and the United States, with the public more concerned with neighbouring North Korea.
“This is to develop green industry technologies and technology to reduce energy consumption, and develop those as one industry … ultimately we want to organize markets for green business ahead of other countries,” said Yang Soogil, chairman of the Presidential Committee on Green Growth, told Reuters.
The scheme caps carbon pollution across the economy, from steelmakers, ship-builders and power generators to even large universities, encouraging them to become more energy efficient.
South Korea is the world’s fifth-largest oil importer and the number two buyer of liquefied natural gas after Japan, so curbing energy imports would bring big savings.
China
A national-level carbon trading program in China is projected to start in 2016, according to a recent report by the Stockholm Environment Institute (SEI). Regional-level trading is projected to start in 2014.
The report, “China’s Carbon Emission Trading: an Experiment to Watch Closely,” concluded that China’s efforts in this arena are both bold and sincere.
“The reports states that China needs to decide on whether carbon tax will be implemented or not and if yes than how will it be managed along with carbon trading,” Climate Connect notes. More from Climate Connect:
The NDRC announced the pilot sites in November 2011: the cities of Beijing, Shanghai, Tianjing, Chongqin, Shenzhen, and Guangdong and Hubei provinces.
The establishment of regional cap-and-trade schemes is part of China’s long-term strategy to reduce its carbon emissions and energy usage. China has announced a target to reduce its carbon intensity by 18% and energy intensity by 16% between 2011 and 2015. The Chinese government is also considering carbon emission caps for some energy-intensive industries and has already announced coal consumption caps for some sectors.
China–EU
Meanwhile, however, China is playing hardball when it comes to the EU law stating that China’s airlines must participate in the EU’s carbon trading scheme when flying in and out of Europe. China has apparently drafted a ‘retaliatory’ law challenging the EU emissions trading scheme.
The draft law states: “China objects to other countries and areas using climate change as an excuse to conduct protectionism in trade, or unilaterally levying carbon taxes or similar taxes on Chinese airlines, ships, etc.”
“However, the EU has rejected all calls to water down its scheme,” the UK’s Business Green notes, “insisting that it was forced to introduce the measures due to the on-going failure to develop an international mechanism for tackling rising aviation emissions.”
In fact, the EU has now stated that 8 Chinese (and 2 Indian) airlines have broken the EU law. All other airlines (about 1,200) have reportedly complied.
“We have given them (India and China) until mid-June to report back their data,” EU Climate Commissioner Connie Hedegaard said, according to Reuters.
More from Reuters:
The Commission, the EU’s executive arm, has the option of fining airlines that break its law, or even banning repeat offenders from flying to Europe, although this would be a last resort.
To reduce tension, the Commission has looked to the U.N.’s International Civil Aviation Administration (ICAO) to come up with a global approach to curbing emissions from airlines.
The body is expected to meet next month to review progress.
As you may or may not be aware, the EU implemented this cross-border airlines emissions law after over 10 years of international discussions led to nothing.
EU
Notably, Climate Commissioner Connie Hedegaard told Reuters’ Global Energy and Environment Summit that she thought the funds from the EU airlines emissions fees should go into climate financing for poor countries.
“Some thought we were just taking this money and saying it was a tax,” Hedegaard said.
“Financial ministers have started this discussion by saying it could go into this (climate funding), but through national budgets.”
Logical. Hopefully, this will help to persuade Chinese and Indian airlines to finally comply with the new law.
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