Carbon Trading: What It Means for China's Energy Policy

China's announcement late last month that it would develop a domestic carbon trading program as part of its next Five Year Plan, just as efforts to enact a carbon trading program in the US were falling apart, highlighted the stark differences between the two countries’ confrontation of climate change and the energy challenges of the 21st century.  While political divisions have stalled the progress of climate legislation in the US, China has moved forward with ambitious energy plans as part of its economic development agenda.  Still, though the news has been sobering to many in the United States, given how quickly the announcement was pushed ahead compared with the seeming impossibility of getting the American political system to act, questions remain about the speed and seriousness with which China will undertake the carbon trading program.  Today’s GR Energy and Climate Brief assesses what sort of impact, if any, carbon trading will have on how China produces and consumes energy, as well as its impact on efforts to control carbon emissions worldwide.

Carbon Trading Program Building on Past Experience

According to the state-controlled China Daily, the decision to enact a carbon trading program was made at a closed-door meeting of the powerful National Development and Reform Commission, which has broad jurisdiction over economic development and energy policy. The meeting was chaired by Xie Zhenhua, the NDRC’s deputy director; officials from various ministries, enterprises and environmental groups were also in attendance.  The carbon trading plan will be incorporated into China's 12th Five-Year Plan, which begins in 2011.  The program would add teeth to the decision by the State Council, the chief executive body in China, to include carbon emission reduction targets in its economic and social development programs, including the Five-Year Plan.

Full article here.