Chinese regions prepare for carbon trading as state mulls coal cap

January 22, 2012 in Carbon Trading - China

http://www.businessgreen.com/bg/news/2137394/chinese-regions-prepare-carbon-trading-mulls-coal-cap

Seven provinces and cities told to make final preparations in bid to help China reduce carbon intensity 17 per cent by 2015

By BusinessGreen staff

13 Jan 2012

Seven Chinese cities and provinces have been ordered to cut emissions in preparation for the country’s pilot carbon markets.

A note issued today by China’s state planning agency, the National Development and Reform Commission, demands the cities of Beijing, Tianjin, Shanghai, Chongqing and Shenzhen, and provinces of Hubei and Guangdong, set “overall emissions control targets”.

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The provinces and cities must also submit proposals explaining how these targets will be allocated, establish a dedicated fund to support the nascent market and draw up detailed implementation plans, news agency Reuters said.

Guangdong province, the country’s largest CO2 emitter, is ahead of the curve in that its plans have already been approved by the country’s cabinet. The south-eastern province has committed to increase the share of non-fossil fuels to 20 per cent of total energy consumption by 2015 and cut its carbon intensity – a measure of CO2 emitted per unit of GDP – by 19.5 per cent.

As well as the seven official pilots, more than 100 other regions and cities are looking to start carbon exchanges, inspired by China’s stated aim of using “market mechanisms” to reduce carbon intensity by 17 per cent from 2011 to 2015.

However, the country is struggling to cap the emissions pouring out of its rapidly growing coal power sector, which green campaigners worry is wiping out the benefits of a massive surge in renewable energy.

Figures published on the website of the National Energy Administration show a rise of 47GW of wind energy capacity, a trebling of solar power to 3GW and the completion of an additional 12.6GW of hydropower, with almost twice that amount scheduled to start producing this year. By comparison, the UK’s total energy capacity is around 75GW.

Yet coal still provides 70 per cent of the country’s electricity and despite government efforts to bring this down to 65 per cent, China burnt an extra 95 million tonnes of coal last year and will soon account for half the coal burned on the planet.

Yang Fuqiang of the Natural Resources Defence Council NGO, told the Guardian that Chinese energy consumption rose almost threefold from the turn of the century to 3.2 billion tonnes of coal equivalent in 2010. On current trends it will rise to almost five billion tonnes by 2020.

The rapid increase has alarmed the government and this week Liu Tienan, the director of the National Energy Administration, called for energy use to be kept below 4.1 billion tonnes of coal equivalent per year by 2015.

This prospect has appalled the provinces, who are believed to want a target of between 4.25 and five billion tonnes to avoid fuel shortfalls if economic growth is higher than the government predicts.

While green campaigners are concerned five million tonnes may be too high, a lower cap could have global significance if it slows a country that has become the world’s largest emitter.