China to Start Carbon Trading While U.S. Senate Fiddles Around

The irony could hardly be stronger: amid reports that an obstructionist minority has blocked US Senate action from moving on clean energy and climate legislation that would create real incentives for clean energy, news reports from China indicate that top government officials met this week to discuss how China can start its own carbon trading program. 

As NRDC’s Executive Director wrote, continuing obstructionism in the Senate is blocking the path forward on essential clean energy and climate legislation in the US that would create good clean energy jobs, reduce carbon pollution and protect our children’s and country’s future.  Meanwhile, China keeps moving forward on clean energy and climate change action.  New reports by the China Daily press agency confirmed today that China will include carbon trading in its 12th Five-Year Plan (the effective law of the land in China), which begins next year and ends in 2015 (as both the English and Chinese news outlets reported).  China’s emissions trading system will most likely be implemented in specific economic sectors such as coal-fired power generation.  As China Daily reports:

“The country is set to begin domestic carbon trading programs during its 12th Five-Year Plan period (2011-2015) to help it meet its 2020 carbon intensity target.

The decision was made at a closed-door meeting chaired by Xie Zhenhua, deputy director of the National Development and Reform Commission (NDRC), and attended by officials from related ministries, enterprises, environmental exchanges and think tanks”

The carbon trading program would help China meet its goal of reducing carbon intensity by 40-45% by 2020.  The story reports that the government of China sees carbon trading as a market-based, cost-effective supplement to current administrative measures to reduce emissions, such as requiring the Top 1000 energy consuming enterprises to sign agreements with the central government to improve their energy efficiency.

There will be differences, of course, between China’s planned carbon trading program and the much-needed climate legislation in the US. China has less experience with financial and environmental trading markets (like the US acid rain trading program) compared to the U.S. or Europe, so it will be essential to ensure the quality and reliability of energy and emissions data for any sector that is included in a carbon trading program.  And there will be differences in scope, since China’s carbon trading program will likely focus on pilots in individual economic zones or industrial sectors, such as the power sector, as it gains experience with the institutions and mechanisms needed to implement a carbon trading program.   

But the overall trend is clear. While U.S. senators continue to fiddle around and fail to pass legislation that will address global warming, China’s leaders are moving full steam ahead to develop solutions that can begin to address its energy and environmental challenges.  This news comes on the heels of a number of reports that China is surging past the US in the deployment of clean energy (as I discussed here and here).  Last year China overtook the US in clean energy investments and China’s domestic wind manufacturers have doubled their market share in the span of one year.  I wonder what the facts will be next year if the Senate continues to discuss, while China moves forward. 

Don’t get me wrong. The magnitude of China’s energy challenges is huge, just as they are for the U.S.  Last week, an oil pipeline explosion in the northeastern port city of Dalian led to a disastrous oil spill which, even though much smaller than the Gulf oil spill, has nonetheless polluted some 160 square miles of ocean.  And the International Energy Agency recently reported that China surpassed the U.S. last year as the world’s largest energy consumer. But at the end of the day, China’s leaders are making strides to address their energy and environmental challenges, and U.S. policymakers in Washington DC are…well…debating, thinking, and delaying.

So while the US debates (and figures out how to move forward), China is taking steps to further deploy clean energy and lead in the technologies of this century.  The signals today on clean energy coming from China and the US are pointing in complete opposite directions – one country on hold and the other moving forward.  Sad but true.


This post was co-written with David Cohen-Tanugi and Alvin Lin from NRDC's China Program (Alvin from our Beijing office).