Caixin
Dec 10, 2020 07:01 PM
ENVIRONMENT

Stakeholders Expect Long-Planned National Carbon Market to Be Up and Running by 2025

Some three-quarters of the stakeholders in China’s carbon market expect a national emissions trading scheme to be up and running by 2025, according to a new survey.
Some three-quarters of the stakeholders in China’s carbon market expect a national emissions trading scheme to be up and running by 2025, according to a new survey.

Some three-quarters of the stakeholders in China’s carbon market expect a national emissions trading scheme (ETS) to be up and running by 2025, according to a survey published Wednesday, even as previous plans to do so have sputtered in the face of industry and local government opposition.

Of the 567 respondents, over a third expected carbon trading to significantly impact their investment decisions this year. Looking ahead, just over two-thirds expected carbon trading to strongly impact investment by 2025.

Emissions trading markets are touted as an innovative way to get businesses to lower their carbon dioxide emissions. Under the policy, the government gives or sells companies a limited number of carbon credits. Companies that produce less than their allotted emissions can sell excess credits to other businesses. Meanwhile those that exceed their limits must buy credits from other companies or typically face some kind of penalty.

Around half of the respondents came from industrial firms likely to be included in a national scheme, while the other half was made up of industry service providers, industrial associations, researchers and carbon exchanges. The nonprofit organization China Carbon Forum, global consulting and technology services company ICF, and Beijing-based think tank SinoCarbon conducted the survey from July to August 2020.

The survey respondents said that carbon prices will increase over the coming years. They forecast prices would rise from around 49 yuan ($7.50) per ton of carbon emissions this year to 93 yuan by 2030, and 167 yuan by 2050. Even that figure would be lower than the 200 yuan to 300 yuan long-term target laid out by the National Development and Reform Commission (NDRC) in a 2017 plan for a nationwide carbon trading market.

Half of the respondents said they expect the power sector to be included in a national carbon trading market by next year. A similar proportion expected that the cement industry would be included by 2022, with the steel, chemical, aluminum and petrochemical sectors not far behind.

China launched seven city-level pilot carbon markets in 2011 and announced plans for a national market in 2013. The power industry was the only sector included in the 2017 NDRC plan, but the limited scope and low price of emissions quotas has limited the actual cost to companies. There have not yet been regulations issued for a national market covering more sectors.

At a climate change seminar hosted by Peking University’s National Development Research Institute last year, climate policymakers and researchers said the lack of acceptance from local governments and businesses has been a major hurdle to the development of carbon trading.

However the upcoming 14th Five-Year Plan period, which covers the years 2021 to 2025, is expected to see a major push to roll out these markets, especially given President Xi Jinping’s pledge that China would aim to reach peak emissions before 2030 and achieve net zero carbon emissions before 2060.

Wang Liwei and Ren Qiuyu contributed to this article.

Contact editor Joshua Dummer (joshuadummer@caixin.com)

Download our app to receive breaking news alerts and read the news on the go.

You've accessed an article available only to subscribers
VIEW OPTIONS
Share this article
Open WeChat and scan the QR code