China Carbon Market

China intends to establish a seventh emissions trading system, consistent with the National Development and Reform Commission (NDRC). This latest system will begin in the city of Shenzhen, which is expected to develop it’s own scheme despite being located in the province of Guangdong - already approved for a cap and trade system. Shenzhen’s GDP grew to $150bn USD in 2010 and has a larger economy than countries such as Kazakhstan and New Zealand.

The central government of China has identified emissions trading as the most cost effective tool for encouraging companies to cut greenhouse gas emissions, and intends to use the experience from the seven markets to assist with designing and launching a national system in the coming years. This news follows the href=”http://www.pics.uvic.ca/assets/pdf/news/NewsScan109_25Oct2011.pdf” target=”_blank”>decision of the California Air Resources Board (ARB) unanimously approving a final draft of the state’s cap and trade plan. Both Shenzhen and California are heavy emitting jurisdictions and recognize that balancing environmental sustainability and economic growth is not a zero sum game.

Cap and trade systems encourage heavy polluting legacy industries, such as shale gas extraction, to evolve cleaner business models, while at the same time unlocking the economic potential embedded in the establishment of an entirely new, and multi-billion dollar market.