Global carbon trading scheme boosted by Chinese ‘determination’, says Foreign Office

The drive towards a global cap and trade system for carbon emissions is moving forward due to the “determination” of the Chinese to establish a national carbon trading scheme by 2016.

The Foreign Office special representative for climate change, David King, said in a select committee meeting that it is “feasible” that China will roll out its own carbon trading scheme within two years, clearing the path for a global scheme.

Originally China indicated that it hoped to implement its national trading scheme by 2020, but it has now revised its ambition forward to 2016, King said.

“Everything is going to depend on the Chinese cap and trade process,” King told the energy and climate change select committee.

“I say this because they are, of course, a far bigger carbon market. And for [the European Union] to link in with them leads to a better assurance of prices, and if we then could stretch that to California and Quebec then the bigger it becomes the more likely it is to succeed,” King said.

The EU emissions trading system has been dogged by fundamental issues of oversupply, leading to suppressed pricing levels and a lack of long-term price signals for low carbon investment.

King said that the greatest advantage of a global cap and trade scheme is that “it ties governments into a process which is written into law and is long range,” he said.

But he cautioned that individual national trading schemes need to be developed in a way that is compatible with each other, and that political appetite remains key.

China had initially considered a carbon intensity target for the basis of its scheme, but through international negotiation King said the focus has now shifted towards an outright carbon target which would be more conducive to global market linking.

Although King said it is “feasible” that China may achieve its 2016 carbon trading target, a global scheme will not follow immediately.

“I think we want to see some maturity before we see some linkage,” King said.