Tag Archives: china
Carbon Trading with Chinese Characteristics
To control greenhouse gases the Chinese government is experimenting with pilot programs in seven cities and regions that use markets By Mark Nicholls NEW CITY: On June 18, companies in Shenzhen will have to meet greenhouse gas emission targets as part of a new cap and trade market experiment. Showcasing more than fifty of the most provocative, original, and significant online essays from 2011, The Best Science Writing Online 2012 will change the way… On June 18 China’s pioneering city of Shenzhen is set to notch up another first. From that day 635 companies in the Shenzhen Special Economic Zone—which in 1979 became the vanguard for China’s capitalist revolution—will start using the markets to help meet greenhouse gas emissions targets . This year, alongside the cities of Beijing, Shanghai, Tianjin and Chongqing as well as the regions of Guangdong and Hubei, Shenzhen is imposing greenhouse gas targets on hundreds of companies, ranging from power plants to airport operators. The goal is to develop a national carbon market over the next decade that could help put the brakes on the world’s largest carbon dioxide emitter. “China has internationally pledged 2020 climate targets,” observes Chai Hongliang, an analyst at Thomson Reuters Point Carbon, an Oslo-based information-provider specializing in carbon markets. He is referring to a commitment first made by China ahead of the 2009 Copenhagen climate talks to reduce its economy’s overall carbon emissions per unit of GDP to 40 to 45 percent below 2005 levels by 2020. “It has two ways to reach the target: shut down factories in the last months of 2020 or use more market-based approaches like emissions trading,” Chai adds. As with emission-trading programs elsewhere, polluters in China’s pilots have two options: First, they can meet their targets by reducing their own emissions—by investing in energy efficiency, say, or curbing production. Alternatively, they can buy carbon allowances or credits from companies that have spare allowances or from projects elsewhere in China. Shenzhen faces the toughest target. The companies in its pilot emitted the equivalent of 31 million metric tons (Mt) of CO2 in 2010. They will be allocated around 100 Mt of allowances for the duration of the three-year trial, although expected economic growth means they will have to reduce their carbon intensity by an estimated 30 percent by 2015 compared with 2010. Balancing the need for economic growth with carbon control is a challenge. Emissions in China are expected to rise for years, given the importance China’s political elite continue to place on economic growth. Some observers question how much pressure China’s planners are prepared to put on its big emitters. The pilots set emission limits from January 2013 through the end of 2015. “I think the emissions caps will be relatively lenient,” Chai says. Certainly the regulators will be eager to avoid any “carbon leakage”—that is, driving industry out of their jurisdictions through imposing too stringent targets ahead of any national program. But at this point Chai can only speculate about their stringency. Limited information is available about participating companies, their historical emissions—and even the rules under which the pilots will operate. And part of the reason is that some of these data do not exist. The problem with data To run effectively markets rely on an unimpeded flow of information, clear rules and rigorous oversight. China could both benefit from the lessons of earlier efforts, such as Europe’s flagship carbon market—the world’s largest, known as the European Union Emissions Trading System, or ETS. It is under fire from some environmentalists because of its relatively lax targets and low carbon prices, along with its vulnerability to fraud and abuse. For the regulators drawing up targets, “there are existing processes and mechanisms on energy consumption which could be drawn on, as well as local exercises in creating GHG [greenhouse gas] inventories,” says Lina Li, a Beijing-based carbon markets expert at Netherlands-based consultancy Ecofys. Her firm has advised local regulators and international donors on creating carbon market regulations and infrastructure in China. “But there are still challenges regarding emissions data at the company level.” This is exactly where the E.U. was in 2005, when it embarked on the pilot phase of its ETS—and the lack of emissions data allowed companies to game the system. E.U. governments asked companies to provide their own, unverified historical emissions data, and many inflated their numbers so as to claim more free allowances from government. This practice created an overhang of surplus permits that led to a price collapse in 2007. Generous allocations of allowances are probably inevitable as the price paid for industry acceptance, however, suggests Karl Upston-Hooper, legal counsel of GreenStream Network, a Finnish carbon asset manager that is active in China. “You will struggle to find an ETS that is not overallocated” in its early phases, he says. Indeed, he argues that the pilots in China are less about creating carbon markets and more about gathering data. “I’ve taken the view that they’re implementing an emissions-monitoring system, not a carbon market—and I’m okay with that as a first step on the road.” Most observers—including from the environmental movement—are prepared to give China’s regulators time to get things right. “It is our view that the first step for Chinese ETS is to get the system right from the beginning—the trading platform; the monitoring, reporting and verification system; [emissions] inventories; getting companies informed and cooperative—and gradually shift toward more stringent caps,” says Li Shuo, a climate and energy campaigner for Greenpeace East Asia. Plenty of studies see China’s emissions peaking by 2030. Some are more optimistic: recent ones predict 2025 to 2030. A further data challenge is whether China’s regulators will be sufficiently transparent and even-handed when it comes to the country’s carbon markets. “In Europe and elsewhere, ETS data are under public scrutiny. That may not be the case in China,” says Point Carbon’s Chai. Another concern is insufficient coordination among the seven pilots, Li says. Indeed, rivalry exists among the various authorities, with Beijing deliberately encouraging a degree of “policy competition” to test differing approaches to see which works best. Last, despite a recent announcement by the powerful National Development and Reform and Commission (NDRC) that it is to propose a national carbon cap for China’s next five-year plan, which runs from 2016 to 2020, a national Chinese carbon market is not assured. Other methods could prove more effective. “In China the ETS is not the only tool,” says Wu Changhua, Beijing-based Greater China director of the nonprofit Climate Group. She notes that the nation’s finance ministry is promoting a carbon tax whereas other government ministries are considering a system for crediting and trading energy-efficiency improvements. Wu also cautions that international media speculation around the introduction of a national carbon cap by 2016 is overblown. She argues that the NDRC is agitating for the inclusion of the concept in the next plan to ensure resources are available for more research and policy development. “One thing is for sure,” she adds. “The political leadership in China is much more serious, stronger and determined to tackle environmental problems. But it will be a journey. We’re not going to get there immediately.” Continue reading
Govts Inch Towards Framework For Global CO2 Market
Source: Reuters – Thu, 13 Jun 2013 04:44 PM Author: Michael Szabo and Andrew Allan Environmental activists stage an open-air carbon auction in front of the European Parliament in Brussels, April 9, 2013. REUTERS/Francois Lenoir BONN, June 13 (Reuters Point Carbon) – Governments may this year launch a global framework to tie together national and regional greenhouse gas reduction efforts, a move that U.N. climate negotiators meeting in Germany this week said could lay the groundwork for a global carbon market. The plan would unite schemes currently being developed in nations including the United States and China onto a single platform, encouraging governments to share ideas with the view of eventually designing a global market to help fight climate change. “The idea is to start to road-test a framework for including various mitigation approaches around the world,” said one senior negotiator who spoke on condition of anonymity. “It would be (open to) anyone that wants to voluntarily connect to this framework, to see if the software and hardware is there to build (something) bigger.” The U.N. climate talks are tasked with launching new market mechanisms that will leverage billions of dollars of private sector finance to help poor countries grow economically in a sustainable way. But the negotiations have made little progress in the area, prompting Poland to first float the idea to other governments earlier this year. The plan could include launching a pilot scheme to examine developing common standards that could, for example, join existing and future carbon markets with mitigation efforts or initiatives to slow deforestation rates in developing countries. “It started as an ambitious idea but it’s been adjusted towards a more general approach following a few rounds of consultations with parties,” said Sven Braden, a negotiator for Lichtenstein. “The hope is it will eventually bring in different mechanisms to try to find common ground and assist in producing proposals for new market-based approaches.” Other member states said the concept remains vague and will need further work at U.N. climate talks in Poland in November, or at a yet unscheduled two-day workshop before or after the meeting. “At the moment, it’s very sketchy as there’s not much detail. It will depend on formal negotiations (in Warsaw) in terms of what happens to it,” said Artur Runge-Metzger, lead EU negotiator at the climate talks. MARKETS Existing international carbon markets under the Kyoto Protocol, such as the Clean Development Mechanism (CDM) and Joint Implementation (JI) are used only by the 35 or so signatories to the 1997 agreement to meet their climate goals. As such, countries that never ratified the treaty (United States), pulled out of it (Japan), or were not forced to cut emissions by it (China) cannot use credits from those markets to meet existing or future climate goals. Any new framework to be launched in Warsaw would be under the U.N. Framework Convention on Climate Change, meaning any of the 190 or so parties could take part. Frustrated with Kyoto’s markets, Japan has designed its own offset scheme and is pushing for international recognition that reductions made under it would count against the nation’s pledge to cut emissions by 2020. One Japanese negotiator said his nation would support the Polish proposal if it allowed Japan to offset emissions via its Joint Crediting Mechanism. “We’re implementing a real scheme, so if this proposal is for a test phase with no specific meaning for 2020 (goals), we wouldn’t have much interest,” said Yuji Mizuno, a director at Japan’s environment ministry. Green groups were opposed to Poland’s idea and called for a review of existing carbon markets before launching new ones, noting the CDM, JI and EU carbon markets are suffering from record low prices due to weak national pledges. “It’s a recipe for disaster,” said Kate Dooley, a campaigner with Third World Network. “Instead of learning from these failures and figuring out what went wrong and (how) fix that, northern governments in particular are pushing forward this discussion of markets … with even looser rules and very broad eligibility criteria.” Continue reading
Database Says Level Of Global ‘Land Grabs’ Exaggerated
By Matt McGrath Environment correspondent, BBC News While the majority of investment still comes from developed countries to Africa, there is a growing trend for regional and national investment in land Researchers have released a new version of a database that records global land acquisitions by governments and private investors. There has been growing concern that large purchases, often in Africa, were in effect “land grabs” by the rich. But the Land Matrix Global Observatory says that many deals have been significantly exaggerated. The database has been developed by a group of five international research centres. For several years now, media reports of land acquisitions have highlighted the growing trend of private investors and national governments to secretly acquire land in poorer countries in order to secure supplies of food and other resources. Campaigners have complained that these investments were often unjust, with the people living on the land being thrown off by the new owners. Verified deals But despite the concerns that many investors are buying to take advantage of high food prices, there has been very little clear information about the scale of the issue. After being launched in beta mode last year, the Land Matrix Global Observatory now hopes to paint a more realistic picture of the number and impact of land purchases. The database suggests that more than 46 million hectares of land have changed hands in 756 verified land deals. About half of all transactions take place in Africa, with many in Mozambique and Ethiopia. Land battle in India In the Indian state of Gujarat, some 50,000 hectares have been acquired near Ahmedabad by the government for development as a special economic zone. But for the 16,000 people who live in 44 villages in the region and who graze their animals on this land, the move is unwelcome. As they don’t have legal title, they would receive no compensation if the plan goes ahead. But the researchers say that getting accurate information remains a significant challenge. They quote the example of the investment by Agri-SA, the South African national farmers’ union, in land in Congo-Brazzaville. Initial reports suggested that 10 million hectares were being purchased. In the end, a contract was actually signed for 80,000. Much of the hype comes from investment companies trying to influence the market, the researchers say. They also believe the role of countries like China has been exaggerated. “We see from the new data that the activities of China have been overestimated,” Dr Ward Anseeuw, from the French research centre CIRAD, told BBC News. Demonstrators in Burma protest about land grabs that have become the focus of growing resistance “In the press you see China everywhere, but in the database there is not as much China as we think there is.” While the bulk of direct investment continues to come from western countries and companies, there are growing numbers of land purchases that are funded by national or regional governments. In Asia, over 80% of acquisitions are financed from within the region. The researchers found that when land has been bought for agriculture, it was split equally between food and non-food crops. The team said there was no clear bias towards biofuel crops. Invisible hand But apart from direct investment, the new database suggests there are some worrying trends emerging. “What we are seeing is the development of other instruments that allow investors to be more invisible, such as contract farming or through bank control,” said Dr Answeeuw. “Instead of buying land through a foreign entity, they are buying stakes in local agribusiness that are controlling these lands.” While the researchers say that economic failures especially in Africa have made investors more cautious about where they put their money, the inflow of funds is still posing some significant challenges for indigenous peoples. “In many cases, it is common land or community land that is under threat,” said Michael Taylor from the International Land Coalition. “If it is grazing land or land that local people use, they don’t have any legal protection. It is on this land that we see the gravest of threats,” he said. The database now uses a wide number of data sources to help increase both accuracy and transparency. While those involved recognise its limitations they believe that it will promote good practice. Not all foreign direct investment is land-grabbing. “If there is no investment in agriculture in Africa, it will not grow,” said Dr Answeeuw. “We need these investments; the public sector alone can’t do this. We need the private sector to come in,” he added. Continue reading
