China must set a national cap on CO2 emissions and expand and improve its market mechanisms if it is to meet its target of peaking greenhouse gases by 2030, a group of academics said in an article published in Nature magazine.
The article, penned by academics from Harvard, East Anglia and Tsinghua universities, said China would need to bring annual emissions growth to below 2%, roll out a national ETS and increase the share of renewable energy to 30% to meet the target.
“In the expanded (carbon trading) scheme, a national emissions cap must be set and central government should develop standards and a timeline to unify cap criteria across the country,” the report said.
Officials have said they will introduce a national ETS in late 2016 or early 2017, but it remains unclear whether permit allocation initially will be based on absolute or relative targets.
Xie Zhenhua, China’s former top climate change official, said last year an absolute cap would be set “as soon as possible”, but would not be drawn on whether that would be from 2016 – which is the first year of China’s next five-year plan – or later.
The academics, led by Zhu Liu, currently at Harvard but formerly of the Chinese Academy of Social Sciences, mirrored earlier calls that while China needs an overall target for emissions, the nation’s wealthiest regions must be given the toughest targets.
“Developed coastal provinces, such as Guangdong, Zhejiang and Jiangsu … should pledge more-aggressive and earlier peak targets — for example, reducing carbon emissions per capita to below those of the EU before 2030 or even 2020,” they wrote.
“Emissions in underdeveloped regions such as Shanxi province and the Ningxia and Xinjiang autonomous regions could be allowed to peak after 2030 to leave room for more infrastructure construction.”
KEY SECTORS FIRST
In designing the national carbon market, China should start with the six biggest-emitting sectors – power generation, ferrous and non-ferrous metallurgy, construction, chemicals production and aviation services, the article said.
It proposed that geographical expansion from the current pilot schemes could be done step-by-step, allowing higher-level regional markets to develop, for example by building a northern China market around the carbon exchange in Beijing.
The Beijing municipal government is already in talks with several provinces in the region about including some of their cities in the Beijing scheme, while down south there are discussions about linking the markets in Guangdong and Shenzhen and potentially expand that market to cover other nearby regions.
It is not clear how such regional initiatives fit in with the NDRC’s plans for a national market, but Su Wei, a senior climate official in the agency, said last week there could be scope for some regional expansion, especially if the launch of the national ETS is delayed to 2017, which would likely prolong the life of the pilot markets by a year.
REFORMS
The Nature article said a national ETS should come in tandem with improved market mechanisms in the energy supply system, such as breaking the monopoly of large state-owned enterprises like PetroChina and Sinopec, which would encourage innovation and improved efficiency.
“Second, an energy-supply market needs to be set up to allow prices to respond to demand and incentives,” it said.
“The price for energy delivered to the grid is now controlled by the government and is largely static. This creates barriers to the connection of power from renewable sources: low-carbon electricity is sold at a higher price than electricity generated from fossil fuels.”
It proposed a carbon tax on some emission-intensive sectors, including transport, which would help slow down fossil fuel growth.
China would also need to improve MRV transparency and champion green technology in its less-developed regions to meet the target, the academics said.
By Stian Reklev – stian@carbon-pulse.com
