China, the world’s biggest energy consuming nation, may have a carbon trading system in place as soon as 2013, said Richard Sandor, one of the pioneers of the carbon credit market.
A cap-and-trade market in China may be in place by 2020 and could be functioning by 2013 to 2015, Sandor said at a climate change forum in Hong Kong today. He helped found London-based Climate Exchange Plc in 2003, agreeing to sell his stake in the company in April to Intercontinental Exchange Inc.
“Irony of ironies, there’s a better understanding of cap and trade in Beijing than in Washington,” Sandor said. “In a Communist economy, the need to do it is very, very high.” Under a cap and trade system, emitters who reduce carbon more than a set amount earn credits that they can sell.
Carbon is now the largest traded commodity in Europe, Sandor said. The system works and emissions are declining. Reduction targets are being met, and need to be tightened, he said.
“Europe is not as far ahead on cap and trade and China is not so far behind as people think,” Sandor said.
Envoys from around the world are to meet in Cancun in Mexico from Nov. 29 to Dec. 10 to try to reach an international agreement on climate change. Negotiators failed to reach a binding deal on greenhouse gas emission cuts at a United Nations summit in Copenhagen last year.
Climate Exchange, owner of emissions markets in London and Chicago, said in September its first-half loss narrowed as average daily volumes on its European Climate Exchange more than doubled.
‘Bullish’ on Markets
The loss was 174,000 pounds ($280,000) compared with 1.38 million pounds, a year earlier, the Douglas, Isle Of Man-based company said. Traded volumes on its London exchange, the world’s biggest for greenhouse-gas allowances, climbed to 2.69 billion metric tons of carbon-dioxide equivalent in the first half, up from 1.07 billion tons a year earlier.
China, the world’s biggest polluter, is discussing rules to implement a domestic carbon-trading market to reduce emissions and promote clean-energy industries, an official said last month.
Sandor said he is “very bullish” about the success of market-based solutions to environmental issues in China and India.
“I believe that we will look at these problems in twenty years time in the same way that we now look at acid rain,” Sandor said. “I thoroughly believe that if we work together, there’s a simple problem, and we can use market-based solutions to solve these social and environmental problems.”