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Carbon trading coming to Shanghai

07-27-2012 10:52 BJT

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The platform will be based at the Shanghai Environment and Energy Exchange. The trials will involve 200 firms in 16 industries, such as steel, petrochemicals, non-ferrous metals, and power and six non-industrial fields, such as airlines, ports, airports and hotels.

Scientists say these kinds of companies are responsible for approximately 110 million tons of carbon dioxide emissions a year, or nearly half of the city’s annual emissions.

Zheng Dawei, head of Investment Banking Dept.,SPD Bank, said, "Carbon emissions trading treats carbon credits as merchandise that can be bought and sold. The companies will first be given initial quotas for carbon emissions for free, by Shanghai’s NDRC. The quotas are based on their historical emissions data. Any surplus or shortage of credits can be adjusted through transactions in the carbon credit market. "

Zheng says it’s imperative for China to establish a national carbon emissions trading market and then to join international efforts. China’s involvement in the international carbon market now is mostly through what’s known as the CDM, or Clean Development Mechanism. The way it works is that developed countries get a carbon reduction credit by investing in clean energy projects. But the CDM faces an uncertain future.

Zheng said, "The Kyoto Protocol, the international treaty to combat climate change, gave birth to the CDM. However, the first phase of the protocol is due to expire at the end of this year. I think that’s also one of the reasons why China has to start its own carbon market next year. "

Beyond Shanghai, six other cities and provinces, Beijing, Tianjin, Shenzhen, Chongqing, and Guangdong and Hubei Provinces will be involved in the pilot project. And if all goes well, a nationwide system is scheduled to be in place by 2015. Zheng says that’s expected to help the national goal of a 17 percent reduction in carbon intensity by 2015.

Editor:Wang Xiaomei |Source:

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