China studying regional CO2 caps: official

BEIJING Thu Aug 18, 2011 6:08am EDT

BEIJING (Reuters) - China is researching implementation of an absolute carbon dioxide cap in a number of pilot regions, a National Development & Reform Commission official said on Thursday.

"We are choosing certain regions that have the right conditions to implement controls over total carbon emissions," Su, director general of the NDRC's China Climate Change Office, told an industry conference.

He did not say which regions would be part of the pilot scheme, but added that he hoped regional caps would be the first step in the gradual establishment of a national emissions trading scheme.

Beijing has pledged to reduce carbon intensity -- the amount of carbon dioxide produced per unit of GDP -- by 17 percent over the next five years, and has also committed to using "market mechanisms" to reach its targets.

"In reducing emissions in the future, more policies will rely on market methods," Su said.

Dozens of proposals have been made, including trading energy consumption quotas between cities, and imposing absolute carbon caps on energy-guzzling sectors such as steel, power and cement.

Su said China was also committed to setting up voluntary carbon trading mechanisms in the next five years.

But the country faced many difficulties because it lacked the necessary legal infrastructure, and standards and monitoring systems, as well as specialist staff to set up a carbon emissions market, Su said.

"There is a kind of misunderstanding that carbon trading just requires the establishment of a trading exchange -- this is a very narrow view," he said.

The State Council, China's cabinet, has drawn up a comprehensive low-carbon "five-year plan" that is expected to include a nationwide energy consumption cap of 4.1 billion tonnes of standard coal.

However, Beijing has been wary of imposing an absolute national greenhouse gas cap, saying its priority as a developing country is still economic growth, and that industrialized nations should continue to bear most of the burden when it comes to cutting global emissions.

Under the Kyoto Protocol, developing countries are not obliged to make absolute cuts in CO2 emissions, a principle known as "common but differentiated responsibilities".

(Reporting by David Stanway; Editing by Chris Lewis)