China launched a carbon trade scheme Tuesday in south China’s city of Shenzhen, which is one of seven pilot cities for emission trading before a national roll-out.
Through carbon credits, a total of 20,000 tons of carbon dioxide at the Shenzhen Eastern Power Plant was sold to Hanergy Holding Group Ltd. and China National Petroleum Corporation at a price of 30 yuan (4.89 US dollars) per ton, marking the first mandatory carbon emission trade in China.
A total of 635 large industrial enterprises and 200 buildings in Shenzhen are now included in the carbon trade system.
Under the scheme, each company will be evaluated and approved a set amount of carbon dioxide emissions. If an enterprise exceeds its emission quota, carbon credits must be purchased from others. If a company has carbon emission lower than its quota, it can sell such credits.
“A certain enterprise has to make plans for the cost of buying carbon credits from other enterprises, who can make a profit as a result. Since the cost for energy conservation and emission reduction is reduced, we can optimize the allocation of resources,” said Chen Hai’ou, CEO of Shenzhen Emission Exchange.
The price for carbon credits will be set by market supply and demand. If there is high demand for carbon credits, the price will rise, further enticing businesses to reduce their carbon emissions.
“Policies on energy conservation and emissions reductions will tend to be tighter in the future, and as a result, the ability to purchase (another company’s) carbon will become more rare, so I think that the price of 30 yuan per ton will rise in value in the future,” said Wu Hongjie, carbon emission trade manager at Hanergy Holding Group Ltd..
China is responsible for a large portion of global energy consumption and greenhouse gas emissions, so the Chinese government has promised to deliver a 40-45 percent reduction to emission intensity by 2020.
“Such a policy is geared towards controlling the immoderate consumption of resources. As it is supported by law, all enterprises have to evaluate their energy consumption,” said Chen Hai’ou, CEO of Shenzhen Emission Exchange.
Wu Changhua, director for the Greater China region at Climate Group, said that China is making concrete efforts for emissions reductions by launching such a scheme.
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