It’s one of those spectacular ironies of history when the communists push forward into market reforms where the capitalists fear to tread. But that’s where we’re at today with carbon pricing. As Australia prepares to dismantle its emissions trading scheme via a politically driven government with little interest in markets and a clever coal billionaire who controls the Senate, China launches its price pilot, from the FT:
A proposed national Chinese carbon trading scheme is likely to see carbon prices trade at a level that helps to cut emissions slightly but is not high enough to yield dramatic reductions, according to a survey of the potential price for carbon in the world’s largest polluter.
A national scheme is still far off but experimental trading has begun on China’s only existing carbon market – a pilot project in the southern boomtown of Shenzhen, on the border with Hong Kong. Several other pilots are due to open in the next two years as China tests the water for a market-based system to discourage polluting emissions.
A survey of financiers, regulators, academics and industry players showed that half expect a national scheme that unifies experience from the various pilots to be launched by 2018, said survey author Frank Jotzo of the Crawford School of Public Policy at Australian National University.
Exchange-traded prices by that point would reach 53 yuan per ton of carbon dioxide, according to average expectations among respondents. China is also expected to impose a carbon tax by that time. Survey respondents estimated the tax could equal about 7 yuan per tonne in 2016 but rise to 32 yuan per tonne by 2025.
That would put carbon prices in China well below current Australian levels of about A$24 a tonne but above European costs. Benchmark European prices are at 4.79 euros per tonne, down 28 per cent since the start of the year.
“If the price of carbon is somewhere between 50 to 100 yuan you might get a 10 to 20 per cent reduction [in carbon emissions] but it’s not enough to get a peak and decline. It would have an effect but the effect is unlikely to be of the magnitude to allow a turnround,” Dr Jotzo said. He added that other regulatory measures might also be in place by that point to help push polluters to reduce emissions.
The cynics among will object that it’s all too little. But that’s not the point. A carbon price is born now in China and will grow. Here it is stillborn and finished.
