China on Friday launched the world’s largest carbon market to help reduce polluting emissions from the Asian giant, the world’s largest greenhouse gas emitter.
It is also the country that invests the most in new energy, and Beijing has promised to achieve carbon neutrality in 2060.
Trading began at 9:30 a.m. local time (1:30 GMT) on the Shanghai Energy and Environment Exchange, China’s official new news agency said in a brief statement.
This carbon market allows, for the first time, provincial authorities to set quotas for thermal power plants, and allows companies to purchase pollution rights from others with a lower carbon footprint.
The first transaction was fixed at 52.78 yuan ($ 6.8) per tonne of carbon.
Very low price compared to those charged last year in the European Union (about $ 36) and in California ($ 17).
In particular, the authorities issue a certificate for each tonne of carbon dioxide (or other greenhouse gases) for which the company is authorized to emit.
In case of non-compliance, the latter must pay fines.
For the sake of transparency, companies will need to publish their pollution data and allow them to be checked by third parties.
This carbon market currently only applies to the electricity sector, whose power plants in China continue to operate mainly on coal, one of the most harmful to the environment.
And for some analysts, fines for non-compliance are not dissuasive enough.
One more thing: pollution permits are shared for free, instead of being put up for auction. As a result, there is less incentive for companies to reduce emissions quickly.
President Xi Jinping drew applause in late 2020, announcing that his country would start reducing pollutant emissions before 2030 and achieve carbon neutrality by 2060 – that is, absorb as much as it emits some.
But in its current form, “the carbon market will not play a big role in achieving these goals,” warns Lauri Myllyvirta of the Center for Clean Air and Energy Research (CREA).