China may cap-and-trade before US

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Sep 062010

While the US Senate has backed off on climate legislation, China is considering launching emissions-trading programmes within five years, write Alexander Ochs and Haibing Ma.

Just when leaders in the United States Senate admitted to abandoning their plan of issuing a federal climate bill by the end ofTianjin_port_cap-and-trade_thumbthis year, top Chinese officials were discussing how to launch carbon-trading programmes under their country’s next (12th) Five-Year Plan (2011-2015). Serving as China’s overarching social and economic guidance, Five-Year Plans consistently lay out the most crucial development strategies for this giant emerging economy. Once included in the plan, carbon trading will be viewed as part of China’s national goals and will be domestically binding. This occurred most recently with the country’s 2010 energy-intensity target, which called for a 20% reduction from 2005 levels and was disaggregated into provincial and local targets, with local officials held accountable for achieving them.

In short, China seems to be accelerating full-throttle toward a low-carbon economy. Chinese policymakers have been eyeing a domestic emission-trading scheme for a while. In August 2009, National Development and Reform Commission (NDRC) deputy director Xie Zhenhua announced that China would launch a pilot carbon-trading programme in selected regions and/or sectors — basically the same message now discussed for the Five-Year Plan. On one hand, this reiteration demonstrates that the Chinese government is seriously considering such a market-based mitigation mechanism; on the other hand, the fact that the programme’s status is still in discussion one year later shows that putting cap-and-trade into action might be not be so easy in China either.

[Read our full article on Chinadialogue]