Carbon industry experts say China’s carbon market presents massive growth opportunities as the Chinese government continue to show commitment to cut its carbon intensity.
Speaking at the Carbon Forum Asia held in Singapore this week, Chinese official Kang Yan Bing said that if the government’s energy-saving goals are not fulfilled, local governments and large-enterprises will be penalised.
Last year, China pledged to cut its carbon intensity by 40 to 45 per cent emission per unit of gross domestic product by 2020.
To achieve the target, China will rely on the target responsibility system, by assigning energy saving goals to local governments across the country, explained Mr Kang, who is also involved in the shaping of China’s Five-Year Plan, starting in 2011.
He is the director of Clean Development Mechanism (CDM) Centre of Energy Research Institute of the National Development and Reform Commission of the People’s Republic of China (NDRC).
China’s rush to meet its energy-saving target has placed extreme pressure on the local governments.
In September this year, the provincial government in Anping County in Hebei province cut off power to hospitals and streetlights for more than a week to meet energy saving targets. Beijing intervened and power was restored, but other counties in Hebei continue to implement similar far-reaching cuts.
Speakers at the conference agreed that China will find it hard to achieve its proposed carbon reduction target.
According to scientific journal Geophysical Research Letters, one third of China’s carbon emissions are a result of producing goods for export.
“China proposed an ambitious target to show the world it is a responsible large country that is dedicated in the combat against climate change”, Mr Kang told Eco-Business.
He noted that the biggest challenge in achieving the target is reducing the carbon emissions of China’s manufacturing plants. “We will continue to need much international support in terms of technical transfer and technical expertise,” he said.
Chen Huan, general deputy director of China CDM Fund Management Centre, a government body that invests money from carbon credits, added that the Chinese government takes CDM seriously even though it receives little revenue from CDM transactions.
“We are supportive of CDM because it helps local enterprises that have little international exposure to improve their management and equipment,” he said.
Last week, the China CDM Fund Management Centre announced that it will double its available cash for renewable energy projects to US$1.5 billion.
China is currently the world’s largest CDM market and owns close to 60 per cent of the world Carbon Emission Reduction (CER) units, or carbon credits.
Speakers from foreign companies agreed that there is still a huge potential in the carbon reduction market in China to tap on.
“We’ve been very pleased with the response from China and we think it will lead to a very promising market,” said, Philippe Chauvancy, commercial director of BlueNext, a leading European environmental exchange that trades carbon emissions.
His company set up an international carbon-trading platform with The China Beijing Environmental Exchange (CBEEX) last year to promote CDM projects based in China.
However, Mr Chauvancy noted that the carbon market is not just about business tools and technology.
“Awareness of CDM is very important”, he said. “People in China need to realise this in order for the projects to work out.”
Foreign companies will play a critical role in engaging with state-led enterprises and can help identify opportunities to reduce carbon emission, said Cathy Jin, a carbon originator from Gazprom, one of the world’s leading producer of natural gas.
“Communication between foreign players and local enterprises will be the key in the new market,” she said.
