China’s green-trading rise puts world on notice RSS Feed

China’s green-trading rise puts world on notice

Cross-border market links may leave Japanese manufacturers out of the loop

TOKYO — China is fast emerging as a major force in emissions trading, and experts say that may work against Japanese companies.

Now that the Paris Agreement — a United Nations-backed accord aimed at reducing greenhouse gases — has gone into effect, governments are expected to ramp up their efforts this year to curb emissions.

Attracting considerable attention among the governments involved is China’s plan to introduce a unified nationwide emissions trading system as early as this coming summer. Beijing wants to expand systems that are already in place in selected locations, as well as link those efforts with moves in Europe and other Asian countries.

The new system appears likely to impact the business strategies of Japanese companies operating in China, as well as Japan’s plans to introduce its own emissions trading system.

Cap and trade

In 2013 to 2014, China introduced pilot emissions trading programs in seven cities and provinces, including Shanghai, Beijing, Tianjin and Guangdong Province. The program places caps on carbon-dioxide emissions by a total of over 2,000 companies that each produce annual CO2 emissions of between 10,000 and 20,000 tons. These companies try to stay within the permitted emissions threshold by buying and selling their emissions credits.

Credits covering over 80 million tons of emissions are traded under those programs. Most of the companies involved achieve their targets, though it is not known how the companies in the trading system for Chongqing are faring, as the market has not disclosed its results.

The credits trade at an average of 30 yuan ($4.33) per ton.

Jin Zhen, an expert on China’s environment policy at the Japan Science and Technology Agency (JST), said he would give China’s trading system efforts a score of 70 out of 100.

Jin, a fellow at the agency’s China Research and Communication Center, lauds the programs for introducing mechanisms to curb price volatility, including a rule enabling companies to carry over their credits to the following year.

The planned nationwide system will be introduced in phases, starting with eight industries — including petrochemical, steel and power — and eventually cover a total of 7,000 to 8000 companies.

Read full article at Nikkei Asian Review