Business in the Air

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  On June 18, 2003, China’s first carbon trade platform opened in Shenzhen, marking the country’s inaugural foray into carbon trade. On November 5, 2013, the “China Climate Registry”(CCR), the country’s first non-profit greenhouse gas accounting and reporting platform, was launched and will provide more accurate numbers for China’s carbon trade.
  CCR was developed by Innovation Center for Energy and Transportation(iCET) with technical support from the Climate Registry, the most influential greenhouse gas registry organization in North America. iCET drew from its successful international experience and upgraded its methodology to align with domestic industrial practices in China, making CCR meet both international standards and the actual needs of Chinese enterprises and institutions.
  “China Climate Registry” is one of the primary founding partners of the Global Climate Registry Alliance, a partnership between programs worldwide to support efforts to measure and manage greenhouse gas emissions. Launched by founding partner registries in Brazil, China and the United States in June 2012 at the Rio+20 Summit, GCRA aims to build a coherent global greenhouse gas reporting system and use measurable, reportable and verifiable standards to promote globally sustainable development.


  In China, few people are familiar with carbon trading. The Kyoto Protocol stipulated the volume developed countries are permitted to emit by 2012 and granted developing countries more leeway to decide their discharge volumes according to their respective developments. Developed countries can buy emission license from developing countries with either cash or technology transfer, which gave birth to the international carbon market. Although carbon trade has been operating in Europe for many years, it is brand new to China –many companies and organizations having no idea about carbon trade and zero sensitivity about the market.
  “The platform we developed is just like a school, in which companies can check their carbon emissions like grades. Presently, most enterprises are not forced to reduce their emissions by the government. But with the advance of carbon trade platforms, more companies will need to manage their carbon output,” explains Ph. An Feng, president and executive director of iCET. “Contrasting the membership system in California, our platform is totally non-profit and free.”
  Seven carbon trade trial platforms will open in China, but they haven’t yet agreed on standards or the formation of a large integrated market to guarantee fluidity.“Fluidity is the premise of carbon trade,”remarks Jeff Huang, managing director for Greater China, Intercontinental Exchange. “Generally speaking, financial organizations need to get involved before carbon trade begins to guarantee long-term market fluidity well in advance.” Huang emphasizes that China’s carbon trade can be built on California’s experience in the carbon market, since it is a region that also became prosperous from stagnancy. “We should learn its design, frame and methods of promoting market fluidity.”   Due to the European debt crisis, the European carbon trade market has been waning. Also, failure to reach agreements at successive Climate Change Conferences leaves the carbon trade market future ambiguous in the post-Kyoto Protocol era. Zhou Dadi, researcher at the Energy Institute with National Development and Reform Commission, believes that due to China’s current situation, the country cannot develop a nationwide carbon trade market before 2020. Without enough buyers, it will be hard to create a genuine market. In the international market, as the largest developing country, China holds the largest emission share, but Europe and the United States set the prices, leaving China the potential to earn only marginal profits.
  “It would be easy for China to get a good price as a seller, just sell a little,”Zhou argues. “The less you sell, the higher the price rises. But strictly speaking, carbon trade could just be supplementary. As for addressing climate change, we need better reasons to cut emissions than a precarious business opportunity.”

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