China's Plan to Win World Business Race: Carbon Trading

Add this to the list of ways that China is kicking our tail in the race to a clean energy economy: carbon trading. The most recent five-year development plan released by authorities in Beijing includes plans to start developing a system for trading carbon emissions. As a ClimateWire article reveals, this represents a 180-degree shift from just three years ago, when political and industrial leaders were "vehemently" against the concept.

"Everybody now agrees this is a must," Chen Hongbo told ClimateWire's Coco Liu.

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What's most interesting is the reason that China is now taking emissions trading seriously. It's not because they have any obligation under U.N. agreements like the Kyoto Protocol to do so. As a developing nation, they're exempt from any emissions reduction responsibility.

Rather, the government is currently obsessed with improving energy efficiency in the nation's factories and industry, seeing it as crucial to economic competition and national security. They've already started using some authoritarian means, like shutting down the most inefficient factories. But carbon trading, Liu writes:

may serve the mission better. In a nation where nearly 70 percent of the power supply comes from coal, a high carbon-emitting fuel, putting a price on carbon could drive businesses to use energy more wisely.

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While there are no concrete plans yet, everyone expects that China will move fast on developing some sort of domestic carbon trading scheme. Maybe cap-and-trade, or any other system of carbon trading, isn't the only way to "skin the cat" (as our president recently put it) in becoming less dependant on polluting, planet-warming energy sources, but it's a little distressing that the Chinese are putting yet another tool in their clean energy kit while we sit idly by.

Photo: Shanghai Stock Exchange on Wikimedia