The following news item , as reported by Reuters, speaks to the trading efficiency that we had discussed recently. Unfortunately, it also makes it clear that the EU plan for Cap and Trade is in shambles.
The crisis facing the European carbon market will not deter China
from plans to establish its own emissions trading platform or its other
climate pledges, the senior official responsible for climate change
said on Thursday.
Xie Zhenhua, vice-director of
the National Development and Reform Commission in charge of climate
policies, said efforts to cut greenhouse gas emissions were a "domestic
requirement". They were, he said, designed to address longstanding
inefficiency and environmental problems, and did not depend on other
nations, or on the state of the economy.
has pledged these targets to the international community to deal with
climate change and they will not change," he said at an event in
Beijing. "Even if other countries say they will do nothing, we will keep
to our strategy. No matter what happens to our economy, we cannot make any change."
global financial crisis has saddled Europe's Emissions Trading Scheme
(ETS) with a crushing oversupply of carbon credits and record low
prices, but the EU parliament this week rejected proposals to bail the
The ETS allows
enterprises to meet their carbon reduction targets by purchasing carbon
credits from the market, enabling them to keep emitting greenhouse
gases. Many credits have been generated by low-carbon projects in China as part of a United Nations scheme known as the Clean Development Mechanism.
is planning a similar domestic scheme in which carbon-intensive
enterprises and industries can meet their own targets by acquiring the
emission quotas allocated to other firms.
said China ultimately sought to link its carbon trading platforms with
those elsewhere, but was focused now on domestic needs.
the future we will establish a link, but in the next few years we first
need to establish a carbon market according to Chinese conditions and
the conditions of developing countries," he said.
LEARNING FROM EUROPE
said China would learn from mistakes made in Europe, especially when it
comes to prices, with Shanghai set to include a mechanism by which
carbon credits can be taken off the market when supplies are too high
and prices too low.
on Europe's ETS were trading at an all-time low of 2.46 euros ($3.21)
per tonne on Tuesday, down from 18 euros just two years ago. Xie said
the problem was that the mandatory emission cuts in Europe had been set
"Why have the prices gone
from such a high to such a low? Because of the rate of emissions cuts,"
he said. "If it was higher, and if there were more pressures, the
market would be much more active. It is probably related to the initial
design of the exchange and the way emissions targets were allocated."
China is the biggest emitter of greenhouse gases on an aggregate basis, but levels are low in per capita terms.
said China's pilot carbon market scheme was on track, with trading to
begin in the southeastern city of Shenzhen in June and later in the business hub of Shanghai before year-end.
he said China would find it increasingly difficult to meet its 2020
climate change pledges. Problems, he said, would "get harder and harder
and the costs will be higher and higher".
has pledged to reduce 2011 levels of carbon intensity -- the amount of
climate-warming carbon dioxide produced per unit of GDP growth -- by
40-45 percent by 2020.
It has also
vowed to increase the share of non-fossil fuel energy to 15 percent of
its total energy mix by the same period and close vast swathes of
inefficient industrial capacity.