I have blogged about emissions trading programs in the EU, California, Quebec, and others. In June of this year China initated its first pilot emission trading program in Shenzhen. Four more (Beijing, Chongqing, Tianjin and Shanghai) of the 7 proposed pilots are expected to start this year.
The Shenzhen Emissions Trading Scheme (ETS) program covers 635 industrial companies in 26 different industries. In 2010, these 635 companies emitted 31.7 million tons of carbon dioxide and contributed 26% of Shenzhen’s GDP.
In the past, China has used central planning rather than market-based measures to meet its carbon emissions reduction goals. With this approach during the 11th Five Year Plan (2006-2010), China reduced its energy intensity by 19%.
China has committed to reducing its emission intensity by 40% to 45% by 2020. Shenzhen’s carbon intensity reduction target during the 12th five year plan (2011-2015) is 21%.
For the Shenzhen ETS, the 635 companies will be given a certain number of emission allowances for free over the next three years. Unlike California, these allowances are specified in terms of emissions intensity (CO2 emissions per unit of added value). The free allowances represent a 32% reduction in energy intensity. There will be a market-based trading scheme for exchanging emissions allowances.
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