China is trying to tap the emissions reduction potential of personal consumption, and package such reductions as a class of carbon asset to be incorporated into the country’s growing carbon market.
A new local green finance regulation in Shanghai’s Pudong New District says the city will explore the establishment of personal carbon accounts for local residents. These would allow them to save carbon credits earned for low-carbon behaviour, such as garbage sorting and electricity saving, with the potential to exchange for favourable financial products and services.
The regulation also says the district will connect such personal accounts with the city’s Tanpuhui (碳普惠) platform, a mechanism which offers a form of certified carbon credit generated by low-carbon consumer behaviour. Tanpuhui has been trialled in multiple jurisdictions across the country since its debut in Guangdong in 2017.
In its trial in Guangdong, the Puhui Certified Emission Reductions (PHCER) – as the Tanpuhui system is called locally – generated by local residents can be traded for commercial discounts or favourable public services. Companies can currently use the PHCER they acquire from residents as CCERs (China Certified Carbon Reductions, China’s national carbon credit) to offset up to 10% of their yearly emissions.
Shanghai is still in the process of establishing such a mechanism, with a working plan for public consultation released in late March. It says a system will be in place by 2023.
Experts say a key challenge in popularising Tanpuhuiis collecting data from individual consumers. The prevalence of smartphone-based e-commerce and digital payment in China may provide good conditions for collecting personal data indicative of users’ carbon emissions, but obtaining people’s consent and ensuring data security remain challenging. However, there are also arguments that the low privacy protection of Chinese mobile internet provides China with an unparalleled advantage in promoting such consumer-generated carbon credits.
Another challenge is developing appropriate methodologies for calculating reductions based on those data, to ensure the reduction claims are authentic and measurable. An emissions baseline of a personal activity has to be established first, before reduction can be calculated – a difficult task if data is not adequate.
Read China Dialogue’s earlier coverage on how mobile apps in China are spurring green lifestyles.