Australia and China strengthen carbon market collaboration

The Prime Minister, Julia Gillard, has announced during her visit to Beijing that Australia and China have agreed to new arrangements to strengthen our collaboration on carbon markets.

This agreement reflects China’s commitment to tackling climate change with policies to reduce its greenhouse gas emissions, including the development of emissions trading schemes that will put a price on carbon.

Australia has been working closely with China to share information on the design and implementation of emissions trading schemes through technical workshops and joint research projects, and collaboration on economic modelling.

“As China develops its plan for a national emissions trading scheme, it will draw from the experience of pilot schemes in its own provinces and cities and from the experience of countries like Australia,” the Minister for Climate Change, Industry and Innovation, Greg Combet, said.

“I know my Chinese counterpart, Vice Chairman Xie Zhenhua of the National Development and Reform Commission, was pleased to meet representatives from the Climate Change Authority, Clean Energy Regulator and the Climate Commission during his visit to Australia last month.

“In addition to our annual Ministerial Dialogue on Climate Change, which has been an important component of the bilateral relationship since 2009, with today’s announcement we have agreed that our emission trading experts will meet regularly to support development of China’s carbon market.

“This carbon trading experts group will consider practical cooperation projects to share information and experience in emissions trading schemes, domestic offset schemes and other complementary measures.

“For example, a priority for China is to strengthen its capacity to measure, report and review greenhouse gas emissions. This is a critical prerequisite for a national emissions trading scheme that is credible, cost-effective and can link internationally.

“With today’s announcement, we have agreed to assist China develop methodologies to measure and report emissions from the oil and gas sector, petroleum refineries, coal production and the coking sector.”

China’s nationwide emissions trading scheme will be preceded by pilot schemes in seven cities and provinces.

“I also welcome the announcement that Shenzhen will launch its pilot emissions trading scheme on 17 June,” Combet said. “This is an important development and I congratulate those involved in China.”

The Shenzhen emissions trading scheme will initially include around 600 companies, which collectively emitted 31.7 million tonnes of greenhouse gases in 2010, 38% of the city’s total emissions.

Once up and running, China’s national emissions trading scheme has the potential to be the largest in the world - bigger than the entire European Union emissions trading system.

China has pledged to reduce the carbon emissions intensity of its economy by 17% of 2010 levels by 2015 and by 40 to 45% below 2005 levels by 2020.

Last month, Chinese officials presented the country’s detailed plan for developing and implementing a national emissions trading scheme to the World Bank Partnership for Market Readiness Assembly.