– World news selected by Gazette editors for Phuket’s international community
PHUKET: The vast majority of firms covered by China’s pilot carbon emission exchanges met their
targets this year, but success was achieved largely by flexible regulations and a supply glut that kept permits cheap, participants said.
After China’s Chongqing met its deadline on Thursday, all seven of the country’s pilot emissions trading schemes have now finished the trading year, with nearly all complying. A total of 35 million permits have been traded, with prices ranging from 11.7 yuan ($1.88) in Shanghai and 42 yuan in Beijing.
Ahead of talks in Paris at the end of 2015 on a new binding global climate accord, China has pledged to bring greenhouse gases to a peak by around 2030, and the pilot exchanges have been set up with the aim of creating market incentives to cut emissions.
However, it remains unclear how much the emissions trading schemes have contributed to CO2 cuts. Beijing, Hubei and Guangdong said participants achieved year-on-year reductions of 5.96 percent, 3.19 percent and 1.5 percent in 2014, but the remainder have yet to give numbers.
“We can’t really say the market has been very successful – some pilots have done better but others need to improve,” said Richard Mao with the Beijing-based Environomist consultancy.
More than 99 percent of companies covered in Shanghai, Beijing, Guangdong, Shenzhen and Tianjin met their targets on time, but compliance has been achieved by bending the rules.
Only Shanghai and Shenzhen stuck to original deadlines, with the remainder giving firms as long as six extra weeks to avoid defaulting. In Hubei, 26 firms failed to comply by the second deadline of July 10. Chongqing has yet to publish results.
China aims to integrate the fragmented markets into a nationwide scheme next year, and will need to create a nationally tradeable product, but it has yet to decide on a conversion formula, and prices continue to diverge.
The markets remain affected by oversupply as well as the availability of 10.8 million offset credits at much cheaper prices of between 7-23 yuan.
The market is supposed to give firms a financial incentive to cut emissions, but with prices low, the sale of surplus permits does not come close to covering mitigation costs, said Ge Chenghui, who runs the environmental protection department at China’s biggest refiner, Sinopec.
“The decline to merely 20 yuan for each permit is a result of the government easing supplies. Our mitigation costs are much higher than that,” he said.
($1 = 6.2091 Chinese yuan)
— Phuket Gazette Editors
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