Dec. 7 (Bloomberg) -- The European Union is setting up a project to help China begin trading emissions in about eight cities, a collaboration that transcends an impasse between rich and poor nations over the future of the Kyoto Protocol.
A work program between the 27-nation bloc, which runs the world’s biggest emissions market, and China will cover regulations, verification and registries that track ownership of carbon allowances, Jos Delbeke, head of the European Commission’s climate unit, said in an interview yesterday at global climate talks in Cancun, Mexico.
Consultations with China “are going much better than anticipated,” he said. The Chinese program, still in the development phase, won’t cover the entire nation from the start nor include a so-called offset program for industries, the EU official said. “There are going to be a number of cities and provinces.” The nation already has exchanges that might handle emissions trading in Beijing, Shanghai and Tianjin, he said.
China said industrial nations should extend pledges to cut greenhouse-gas emissions after the limits set by the Kyoto Protocol expire in 2012, Xie Zhenhua, China’s top official on climate policy, said at a briefing yesterday in Cancun. That could potentially create a global market. The U.S. has resisted joining Kyoto without limits on China. Developing countries under the 1997 accord still can choose to make “voluntary” pledges to cut emissions, the Chinese official said.
China has adapted its strategy to cut carbon emissions while building its economy, said Emmanuel Fages, a Paris-based analyst for Orbeo, the carbon venture of Rhodia SA and Societe Generale SA. Realizing the U.S. is blocked on climate action by Congress, “China can be more open and have the luxury to corner the U.S. internationally,” he said. “Very soon, the U.S. will be finger-pointed as the only big emitter not doing anything.”
EU emission allowances for delivery this month dropped 0.6 percent to 14.78 euros ($19.75) at 10:45 a.m. on London’s ICE Futures Europe exchange. While the permits are up 18 percent in 2010, they are down 11 percent from this year’s high in May. UN emission credits dropped 0.9 percent to 11.57 euros on ICE. They are down 20 percent from their high in May.
Even as climate talks falter, developing countries potentially including Brazil “will move ahead with domestic carbon market regimes,” said Caio Koch-Weser, vice chairman at Deutsche Bank AG and a member of the United Nations advisory group on climate finance. “China, as part of its next five-year plan, is quite advanced in its thinking,” he said Dec. 5 at the Green Solutions conference in Cancun.
Forecast for 2015
China will have a cap-and-trade system by about 2015 as the world’s biggest emitter takes a lead role in developing clean energy, London School of Economics professor Nicholas Stern said Dec. 5.
“There will be cap and trade in China within four or five years,” said Stern, who published a widely cited study of climate-change economics for the British government in 2006. China wants “to win the green race, and good luck to them,” he said Dec. 5 in conjunction with the climate talks in Mexico. “This is the kind of green race that we need.”
With assistance from Catherine Airlie in London--Editors: Mike Anderson, Bruce Stanley.
To contact the editor responsible for this story: Stephen Voss at email@example.com