China Promises A Cap-And-Trade System For Pollution
Given that China is the world’s biggest carbon emitter, it is fair to be sceptical of its claims to greenery. Yet the emerging giant is already the world’s biggest manufacturer of such green technologies as compact-fluorescent bulbs and solar panels. And it aspires to become an environmental-policy leader too.
The most recent five-year plan emphasised improvements in energy efficiency and laid out a vision for cleaning the air. Now the powerful State Council has formally announced that it will use tools favoured by market-minded economists: emissions-trading systems, perhaps including one for carbon dioxide, and green taxes.
The details are not yet public, but this sounds important. It follows various regional experiments with emissions-trading and a resources tax (which affects petroleum but not solar power). If enforced with vigour—a big “if” in such a decentralised and corrupt place—these new policies could signal a shift towards a more efficient, lower-carbon economy.
Why might China’s leaders impose green rules that many rich countries have balked at? There are several theories. It may be because they feel insecure importing so much fuel, and so wish to make China’s energy-inefficient cement, steel and other heavy industries less wasteful.
Tougher environmental standards might also force such firms to become clean enough to compete abroad, where standards are higher than in China. To that end, recent reports suggest, China will introduce energy-consumption quotas, either by region or by industry, that would rely on a cap-and-trade mechanism.
Another possible reason for drafting tough new green policies is that current ones are flopping. Nate Taplin of GK Dragonomics, a consultancy, observes that the government has set a target for reducing emissions of nitrogen oxides by 10% by 2015 but that those emissions actually soared by 6% during the first half of 2011>
The UN’s troubled Kyoto treaty on climate change may also be a motivating factor. Under the treaty’s Clean Development Mechanism, which issues emissions-reduction certificates to projects in the poor world that can be bought by firms in rich countries seeking carbon credits, several billion dollars have flowed to China.
But from 2013 the EU plans to accept such certificates only from new projects in very poor countries. China does not qualify, so it will lose out. Hence a final theory: China’s push towards market-based greenery could be aimed at persuading outsiders that its low-carbon efforts are credible—and worth supporting with cold cash.