China Says No Carbon Exchange Plan, UN Still Keen
Date: 12-Mar-07
Country: CHINA
Author: Emma Graham-Harrison
UN and government officials said in early February that Beijing hoped to launch a pilot exchange for trading carbon emissions permits this year, to capitalise on China's emergence as a hotspot in a multi-billion dollar market.
Under the Kyoto Protocol's Clean Development Mechanism (CDM), companies or governments in rich nations can fund emissions-cutting projects in developing countries to get carbon credits to offset their own pollution or to sell to others.
But the Office of the National Coordination Committee on Climate Change posted a statement dated late February on its Web site (http://cdm.ccchina.gov.cn) that seemed to reject the plans.
"Currently Chinese government has no plan to establish a so-called 'Climate Exchange'," the short statement said, and added that under the Kyoto Protocol emissions trading schemes could only be set up in countries with binding targets.
But a UN official involved in managing the programme launched in February, who asked not to be named, said they were still hoping to provide a blueprint for some kind of exchange by the end of the year.
"The fact that there is no official plan on the table to establish a programme is in fact the baseline from which we are operating," the official said, adding that he was not worried by the government statement.
"The vision of having some kind of pilot activities commence by the middle or end of the year is still there," he added.
Chinese officials and academics, with UN support, are trying to work out how an exchange might function given that China is a supplier rather than buyer of emissions credits, the official said. All other exchanges are in demand centres.
"Its clearly an ambitious programme, and needs a lot of looking at the best practice...and a basic understanding of what an exchange would look like and how it might function," he added.
Khalid Malik, head of the UN office in China, said in February the exchange would aim to combine sale of carbon credits valid under the Kyoto Protocol with a market in voluntary emissions reductions like those traded in Chicago.
China produced around 60 percent of such CDM credits in a market that saw US$2.3 billion invested globally in the first nine months of last year. A Chinese carbon futures exchange would be the first in Asia and the developing world.
Carbon credits valid under the Kyoto Protocol on global warming still cannot be traded on exchanges anywhere, given certain key technical hurdles which may not be cleared for months, but market players are lining up to get ready.
