China’s Carbon trading scheme

Biodiversity, Earth Day, Ecological Intelligence, Environment

Abu Faisal
March 4, 2021

Recently China has launched the world's biggest carbon trading system to help lower carbon emissions, but critics and analysts have raised doubts about whether it will have a significant impact. Sources said that China is the world's biggest emitter of the greenhouse gases that drive climate change, and the scheme is part of its efforts to decarbonise and reduce the effect that causes by it.

China’s Carbon trading scheme

Abu Faisal

The scheme, which launched on February 1, effectively puts a price on emitting carbon. It allows provincial governments to for the first time set pollution caps for big power companies, and lets firms buy the right to pollute from others with a lower carbon footprint.

However, in its first phase, the scheme only covers the electricity sector, involving 2,200 power producers, which is responsible for 30 percent of China’s total emissions. Local governments issue a certificate for every metric ton of carbon dioxide or other greenhouse gas equivalent which a company is allowed to emit, and companies pay fines for not complying.

“Companies can either cut emissions or pay to pollute, but the latter will become pricier over time as governments issue fewer pollution permits,” said Zhang Jianyu, vice-president of Environmental Defense Fund China.

And, in a rare move to improve transparency, companies involved in the trading system will have to make their pollution data public. But analysts have expressed concerns about the likely accuracy of the data, in a country with an authoritarian government that lacks transparency, and low fines for non-compliance.

Carbon trading is one of many creative approaches the international community has generated to minimize the increase of greenhouse gas emissions. Chinese government and enterprises, seeing the potential of this growing new market, decided to closely follow this emerging opportunity. By selling their surplus carbon credits, qualified Chinese companies have been able to finance alternative energy projects.

There has also been an increased occurrence of climate-related disasters such as drought, flood are amplitude in growing because of Green house effect. These events have grave consequences for productivity when they occur, and also create serious repercussions for the natural environment and infrastructure. This threatens the lives of billions and aggravates poverty.

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China’s Carbon trading scheme

China’s Carbon trading scheme

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