Free-Market Magic! China's Carbon Trading Sputtering - Totals 2% Of Permits PRC Hands Out For Free
Regulatory uncertainty and a lack of transparency have left trade on China's seven pilot carbon exchanges in the doldrums, which could undermine efforts to cut the nation's greenhouse gas emissions.
China told the United Nations on Tuesday it would cap its emissions by 2030, and promised to cut carbon intensity - the amount produced per unit of economic growth - by 60-65 percent from 2005 levels by then as well. China told the U.N. it would build on the pilot regional schemes to help make the cuts, and "steadily implement a nationwide carbon emissions trading system".
The national scheme should be ready by the end of next year or early 2017, but traders said the transition to a national system is already causing problems. "The opaque policymaking process makes it confusing for trading companies, and without clarification on market integration, companies are not encouraged to make long-term trading plans," said a senior trader who declined to be named.
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China said last week it would need to invest 41 trillion yuan ($6.6 trillion) to meet its U.N. pledges. Some of that investment will be raised through the national carbon market, expected to cover around 3 billion tonnes of carbon emissions - about 30 percent of the annual total - by 2020. But liquidity on China's seven pilots schemes has remained low, with just 28 million permits traded over two years, only about 2 percent of the permits handed out annually.
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http://www.reuters.com/article/2015/07/01/us-china-carbon-idUSKCN0PB4BM20150701
