China CO2 market to cover half of total emissions by 2017 launch

A resident rides an electric bicycle across a street amid heavy smog as vehicles wait for a traffic light next to a statue of pandas, a landmark of the Wangjing area in Beijing, China, December 1, 2015. REUTERS/China Daily

PARIS (Reuters) - China’s long-awaited nationwide carbon market will cover as many as 10,000 firms and regulate nearly half of the country’s total emissions once launched in 2017, a senior official said on the sidelines of the Paris climate talks on Tuesday.

Jiang Zhaoli, vice-head of the climate office of the state planning agency, the National Development and Reform Commission (NDRC), said China’s carbon market would become the world’s biggest, and its targets would be higher than those set by the state “in order to guarantee it had sufficient effect”.

“When the market begins in 2017 it will already have almost 10,000 firms,” Jiang said. “After 2020, the size will be bigger and will involve more enterprises.”

The market will cover 31 provinces, six industrial sectors and 15 sub-industries, and will involve 4 billion tonnes of annual carbon emissions at its launch, amounting to almost half of the country’s total, he said.

Chinese President Xi Jinping pledged during his visit to the United States in September that China would roll out a nationwide carbon trading scheme by 2017, building on the seven regional pilot markets first introduced in 2013.

Jiang’s comments suggest the market will begin more ambitiously than expected. Previous estimates from market designers suggested it would regulate 3-4 billion tonnes of carbon dioxide a year by the end of its first phase in 2020.

While China has included the promotion of “market mechanisms” in its pledges to combat climate change, they remain controversial and are unlikely to be included in a final agreement in Paris, said Su Wei, China’s top climate negotiator, at a briefing in Paris on Saturday.

“As far as market mechanisms are concerned, we think the market could play a very important role in achieving actions to mitigate and adapt to the impact of climate change,” he said.

“But as to whether there is going to be inclusion in the text of the Paris agreement, we think that that is not the priority. There are a lot of different views about whether we should rely more on non-market mechanisms... and I don’t think that sort of difference should stand in the way of having a successful outcome in the Paris negotiations.”

Reporting by David Stanway, editing by David Evans