Guangdong to set absolute CO2 cap, push carbon market fixes

Published 12:34 on May 22, 2015  /  Last updated at 12:34 on May 22, 2015  /  China, China's Pilot Markets  /  No Comments

Guangdong, China’s biggest-emitting province, is drawing up a strategy to peak its greenhouse gas emissions, which will include an absolute cap on CO2 emissions and a revamp of its carbon market, the provincial government said.

Guangdong, China’s biggest-emitting province, is drawing up a strategy to peak its greenhouse gas emissions, which will include an absolute cap on CO2 emissions and a revamp of its carbon market, the provincial government said.

The province, which emits between 580 million and 750 million tonnes of CO2e per year according to various estimates – enough to put it on the list of the world’s 10 biggest emitters – this week released its 2015 low carbon development plan, linked from here.

The Guangdong Development and Reform Commission aims to draw up a timeline and roadmap for when its carbon emissions will peak, but did not state a target date.

It will draw up carbon intensity targets and set absolute CO2 caps, both for the region as a whole and for specific sectors, the plan said, but did not specify when the targets would be released.

A number of Chinese provinces are involved in drawing up new climate change strategies as they are expected to be handed new targets from the central government, which is in the final stages of designing the next five-year plan and China’ INDC, although local governments often find such plans difficult to implement.

MARKET FIXES

The plan included several measures to improve the provincial ETS, which is suffering from low liquidity despite being China’s biggest in terms of tonnes of CO2 covered.

Guangdong permits fell 21% over the week to close Friday at 19.06 yuan ($3.07), with only just over 8,000 permits traded.

The DRC said it will improve the legal framework of the market and study various market adjustment measures to boost liquidity, including a potential buy-back mechanism to get rid of over-supply.

It also said it will expand the ETS to cover ceramics, textiles, non-ferrous metals, plastic, paper production, transport and buildings as soon as these sectors are ready. The DRC is working on emission reporting guidelines for the sectors with a view to draw up allocation plans.

The government will also push for a linkage between the Guangdong and Shenzhen markets.

However, the plan did not specify how all those changes would fit with Beijing’s intention to launch a national ETS next year.

ENERGY

In the plan, the DRC also pledged to set caps on coal consumption and energy consumption, as well as introduce a system for renewable energy quotas.

It set out a target to cut carbon intensity 2.45% this year, and implement a plan to improve efficiency at coal plants, promote green buildings and new energy vehicles.

Lastly, it said it would sign MOUs on low carbon development with the UK and California.

By Stian Reklev – stian@carbon-pulse.com

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