Chinese Premier Xi Jinping on Tuesday made good on his promise to launch a national carbon market. Officials from the National Development and Reform Commission unveiled the highly anticipated emissions trading system during a conference call with industry and government representatives, the Australian Financial Review reported.
Though not as ambitious a scheme originally touted, the program — which will cover China’s power sector in its first phase — has already overtaken the European Union carbon market as the world’s largest.
“The launching of China’s national emissions trading system is a
significant step in a long march toward a clean energy economy,” Zou Ji, president of Energy Foundation China, told HuffPost in a statement. “By launching, China sends a strong political signal internationally that China is keeping its global commitments, and is committed to the Paris Agreement.”
Xi vowed in 2015 to establish a nationwide cap-and-trade program that would set limits on greenhouse gas emissions and allow polluters to buy and sell emission credits. The idea had been for the Chinese marketplace to cover eight economic sectors, but that plan was whittled down for the program’s launch.
China will start with its power sector, which accounts for 46 percent of the nation’s carbon dioxide emissions. (The first phase of the cap-and-trade program will reportedly cover an estimated 39 percent of the country’s emissions.) China says it intends to eventually expand the program to petrochemicals, iron and steel, and aviation, among other industries.
As Quartz reported, trading in the emissions credits won’t begin until the regulations are fully fleshed out. Energy Foundation China said the market is expected to be fully operational by 2019.
If all goes well, experts say the program could help China hit its Paris climate agreement targets. The market could reduce China’s carbon dioxide emissions by almost 30 percent by 2030, a rep for Climate Nexus told HuffPost on Tuesday.
A successful program may secure China’s status as a climate leader, particularly as the U.S. retreats from what had been a prominent role.
Miguel Arias Cañete, the EU’s climate action and energy commissioner, celebrated China’s news in a laudatory tweet on Tuesday.
“This announcement sends a very strong signal: the world is changing with new, broad climate leadership,” he wrote.
Trump’s administration on Monday made clear that it no longer considered climate change a national security threat, breaking with 20 years of military planning. Climate change was conspicuously missing from the White House National Security Strategy report, which described China as a “rival power” rather than a partner.
Trump, who infamously called global warming a Chinese hoax, has announced his intention to withdraw the United States from the Paris accord. Fifty world leaders recently gathered in Paris for a climate change conference. Trump was not invited.
China’s goals for its new carbon market could prove challenging to achieve. As Scientific American notes, no carbon trading system in the world, including those in the EU and in California, has resulted in significant reductions in CO2 emissions.
China’s slow start, however, may show the country’s resolve, experts say.
It’s “a sign that China is taking this seriously and wants to make sure they’re doing it right,” Barbara Finamore, Asia director for the China program at the Natural Resources Defense Council, told Scientific American.