Commentary
China is about to launch the world’s biggest emissions trading scheme, because China is the world’s biggest polluter. And, the scheme has three big, huge, truck-sized loopholes that will advantage China’s biggest pollution emitters. First, there will be no absolute caps on China’s emissions as in other trading programs. Second, the fine on Chinese companies that violate the rules is minuscule at under $5,000. Third, the cost of polluting in China will be about 10 times less than the cost of polluting in Europe. That means Chinese industries will have an advantage over their Western and allied counterparts, thus facilitating China’s deindustrializing of the democracies through offering cheaper (sometimes forced) labor, and lower environmental standards, against which democracies cannot compete on price. The low cost of China’s emissions, which are a minimal slap on the wrist, should be heightened through an increase in international tariffs imposed on the biggest of China’s industrial polluters.
China is currently the world’s biggest investor in planned coal-fired power plants. Its cheap energy flows through to all of its exports, which rely on that energy to effectively compete on price in global trade.
Chinese officials are trying to get in front of emissions tariffs by claiming that China’s new carbon market will reduce its emissions to peak before 2030, and achieve zero emissions, or carbon neutrality, by 2060. China’s carbon program is initially targeted at the power sector, in which it will involve 2,225 companies responsible for one seventh of the globe’s carbon emissions due to the burning of fossil fuels, according to the International Energy Agency (IEA).
Emitters will be given a fixed carbon allowance each year, which they can increase through purchases from other emitters, or decrease by improving their environmental practices for which they will be compensated when they sell their unused emission allowance. “That pushes emitters to think of controlling and reducing emissions in terms of a market,” according to the Wall Street Journal.
The emissions trading will begin Friday, according to Bloomberg. It will expand from the power sector to aluminum, cement, and steel next year, according to Chinese officials. By 2026, China’s emissions market will supposedly expand to several additional industries, including building materials, chemicals, domestic aviation, paper, and petrochemicals.
