July 14, 2014 / 1:51 PM / 3 years ago

REFILE-Europe handed out too many carbon permits, says China negotiator

(Refiles to remove word “should” from quote in paragraph 10.)

July 14 (Reuters) - The European Union handed out too many free carbon permits in its Emissions Trading System and did not set a deep enough emission reduction goal, China’s top climate negotiator said on Monday.

China, the world’s biggest emitter of greenhouse gases blamed for climate change, is testing its own carbon markets and aims to set up a national programme by 2017 to help curb its emissions.

Prices in Beijing’s pilot carbon market became the highest in the world last week, rising to 74.07 yuan per tonne following a crackdown on compliance after some companies had ignored a key reporting deadline.

China aims to “draw lessons from the mistakes and some successful experiences” of Europe’s ETS, the world’s biggest, said Xie Zhenhua, vice chairman of China’s National Development and Reform Commission.

“(The EU ETS situation) is not so good ... you issued too many free quotas and the overall emission target was not enough. This made the market very sluggish,” Xie said at an online press conference during the annual Petersberg Climate Dialogue held in Berlin, Germany.

The remarks pile pressure on European leaders, who have pledged to agree by October on a collective 2030 emission reduction goal as the EU contribution to a global pact to tackle climate change, due to be signed in Paris in late 2015.

Xie said all nations should participate in the deal but stressed it should respect the previously agreed doctrine, which places a greater responsibility on industrialised nations.

The negotiations are closely watched by big-emitting industries such as steel and cement, which are wary of being exposed to higher costs from meeting environmental goals in different regions.

Xie said China was aiming to submit its own contribution to the deal in the first half of next year, which may include a future date for when its emissions should peak.

“The capping year might be included. If there is a capping statement, I believe the target would be a very ambitious one,” he said.

Talk of action by the Chinese has raised hopes about the chances of striking a global pact, but observers are keenly awaiting more details.

PRICE WATCH

Intended as Europe’s flagship climate policy, the ETS regulates around half of the bloc’s greenhouse gas emissions by forcing over 13,000 power plants, factories and airlines to surrender a permit for every tonne of carbon they emit under an annually decreasing emission cap.

But permit prices have fallen from a peak of above 30 euros ($40.92) per tonne in 2008 to current levels below 6 euros ($8.18) as the economic downturn has curbed emissions, damping demand and the incentive for companies to invest in cleaner technologies.

The European Commission has proposed setting up a reserve of permits as a mean of better responding to economic changes and absorb some of the market surplus.

European officials have also worked closely with China to help craft seven regional markets in Chinese cities and provinces. Xie said this cooperation was “really appreciated”.

“The current market operation in China is quite stable, and prices are around 60, 70, 80 yuan ($9.7-12.9) per tonne,” he said. ($1 = 0.7331 euros) (Reporting by Ben Garside in London; editing by Jane Baird and David Evans)

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