No special treatment for poor provinces in China’s ETS -official

Published 08:06 on December 23, 2015  /  Last updated at 13:19 on December 23, 2015  /  China, China's National ETS  /  No Comments

Emitters in China’s poorest provinces will be given CO2 caps based on the same principles as their competitors in the nation’s more affluent regions and will not receive any special treatment, an official with the National Development and Reform Commission (NDRC) said Wednesday.

Emitters in China’s poorest provinces will be given CO2 caps based on the same principles as their competitors in the nation’s more affluent regions and will not receive any special treatment, an official with the National Development and Reform Commission (NDRC) said Wednesday.

Speaking at a conference in Beijing, Jiang Zhaoli, vice director at NDRC’s climate change department, addressed industry concerns that carbon emitters in the poor regions in the west and south would receive a more generous amount of allowances in the national emissions trading scheme, set to launch in 2017.

Companies in each industry will receive permits based on the same rules regardless of where they are located, and regional differences will not be taken into consideration in the allocation process, Jiang said.

He added that many of the power plants in the west are more efficient than the old ones in the east because they are newer, so there is no reason to be more generous to them when allocating allowances.

Economic development status differs vastly within China. The special administrative regions of Beijing, Shanghai and Tianjin all have per capita GDP above $15,000, whereas provinces such as Gansu, Guizhou, Tibet and Yunnan are all below $5,000.

Those differences have been taken into account in the provincial and regional carbon intensity targets issued by the NDRC, but they will not be a factor in the carbon market.

Jiang’s comments were in line with statements he made on the sidelines of the UN climate summit in Paris earlier this month, where he made it clear that the overall emissions cap for the ETS will be stricter than China’s overall reduction target, primarily to ensure there is sufficient scarcity in the market to make it an effective tool to drive CO2 cuts.

The ambition to treat all emitters equally will likely ensure there is no internal carbon leakage within China, although the gradual move from east to west of the manufacturing industries that have fuelled China’s economic growth in the past three decades is likely to continue for macroeconomic reasons, as the east is transitioning to an economy reliant on more sophisticated technology and the services industry.

By Stian Reklev – stian@carbon-pulse.com

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