{"id":60022102,"date":"2024-06-03T17:08:28","date_gmt":"2024-06-03T16:08:28","guid":{"rendered":"https:\/\/dialogue.earth\/?post_type=opinion&p=60022102"},"modified":"2024-06-03T17:09:10","modified_gmt":"2024-06-03T16:09:10","slug":"chinas-carbon-market-model-can-guide-emerging-economies","status":"publish","type":"opinion","link":"https:\/\/dialogue.earth\/en\/climate\/chinas-carbon-market-model-can-guide-emerging-economies\/","title":{"rendered":"China\u2019s carbon market model can guide emerging economies"},"content":{"rendered":"\n

Emerging economies \u2013 particularly in Asia and Latin America \u2013 are increasingly setting up carbon markets to help achieve their national climate objectives. This was a clear finding in a report<\/a> on the status of greenhouse gas emissions trading worldwide, recently released by myself and my colleagues at the International Carbon Action Partnership (ICAP).<\/p>\n\n\n\n

As developed countries cut their emissions and emerging economies introduce and expand their carbon markets, a greater share of the global carbon trade will take place in emerging economies.<\/p>\n\n\n\n

China\u2019s carbon markets, which currently cover CO2 emissions only, are based on carbon intensity (emissions per unit of production) rather than the absolute emissions favoured by those of many developed nations. Due to similarities in growth trajectories and challenges faced, other emerging nations can \u2013 and have \u2013 used the Chinese model as a useful entry point when developing their own carbon markets. By creating innovative, hybrid forms inspired by the Chinese experience, these new carbon markets are departing from the established EU model.<\/p>\n\n\n\n

China\u2019s carbon markets matter <\/h2>\n\n\n\n

China\u2019s global share of emissions covered by mandatory carbon markets, currently at 60%, will continue rising over the next three to four years. This has important implications for both policy research and trading.<\/p>\n\n\n\n

This rise will continue firstly because the pie will shrink. As emissions fall in developed economies with absolute emissions-reduction targets \u2013 such as in the EU, US, Canada and Germany \u2013 so too will the share of global emissions covered by their carbon markets. Secondly, in the next few years, China\u2019s national carbon market will come to cover more than just the power sector. The likely inclusion of the steel<\/a>, cement<\/a> and aluminium<\/a> industries is expected to add 2-3 billion tonnes of CO2 emissions coverage.<\/p>\n\n\n\n

\"A<\/div>
When China\u2019s national carbon market expands to include steel, cement and aluminium, this will likely add 2-3 billion tonnes of CO2 emissions coverage annually (Image: Jianhua Fan \/ Alamy)<\/div><\/div><\/div><\/div>\n\n\n\n

Moreover, national carbon markets will increasingly link up, both directly and indirectly. National markets generally focus on reducing domestic emissions, but this will change with both the establishment of international carbon markets under Article 6<\/a> of the Paris Agreement, and more countries proposing carbon taxes for imports of emissions-intensive products.<\/p>\n\n\n\n

As well as being important for realising its emissions goals, China\u2019s massive carbon market has implications for the implementation of carbon markets worldwide.<\/p>\n\n\n\n