Carbon Market: A Brand New Solution to Beijing’s Poor Air

This year’s Climate and Society class is out in the field (or lab or office) completing a summer internship or thesis. They’ll be documenting their experiences one blog post at a time. Read on to see what they’re up to.

By Kit Kung, Climate and Society 2014

China is currently the world’s largest greenhouse gas emitter. In 2009, the Chinese government made a commitment at international climate talks to reduce its carbon emissions by 40-45 percent below 2005 level by 2020. Inevitably, it will have to make these, and possibly deeper cuts, as part of a global effort to address climate change, which means carbon markets could be a big part of China’s future.

That’s partly why I decided to continue my career in carbon reductions-related business as an intern with a carbon consulting company in Beijing. My first task was to research Chinese regional carbon markets. The markets are not only efforts to mitigate climate change but also a significant means to improve the unhealthy, and sometimes lethal, air quality.

Beijing’s CBD (Source: Simon Kung)

On my first day when I left the office in Beijing’s Central Business District., I found the surrounding amazingly designed skyscrapers awe-inspiring. But the sight of deadly smog ruined my mood. The air pollution index that day indicated “unhealthy for going out.” 

Surprisingly, my colleague told me she hadn’t seen such a clean sky for couples of days. I know the poor air shouldn’t surprise me – modern Beijing’s poor air is public knowledge. But the astonishing facts frightened me – China’s air pollution leads to millions of early deaths annually and also poses a serious hazard to the healthy growth of children.

Economic reforms in the late 1970s cranked the country’s development to an incredible pace, largely through investment in heavy industrialization. The economic upsurge has relied on tremendous energy reserves – and most of this energy, about 70 percent –comes from coal, a well-known dirty fuel.

Beijing, the capital of China, is now suffering from severe air pollution. The mountains that surround Beijing are a big reason as they trap pollutants from vehicles and power plants.

The recent Beijing’s Clean Air Plan alleged that the city’s carbon emissions would be reduced by 20 million tons by 2018. The plan recommends a series of actions including banning the use of low-grade coal, driving restrictions, and promoting clean fuel and renewable energy to create healthier air quality levels.. Carbon markets are one tool that could help the city to win the battle against pollution.

A cap-and-trade market allows industries to minimize their efforts while meeting the emission reductions as a whole. Seven pilot markets are operating in some of China’s largest cities, including Beijing. Each market has the same goal of reducing emissions but their targets and enforcement are administered at locally. At the same time, the markets are eligible to be considered as projects that fall under international agreements such as Clean Development Mechanism, which connecting developing countries’ emissions reductions with developed country carbon markets.

It seems promising, right? But the Chinese carbon markets are actually far from perfect. There is lack of transparency. Markets in Beijing and Tianjin have yet to disclose any emission permits or caps. It is vital for any market to publish reliable and timely information. The current stringency of the schemes are also rather vague, making the pricing a guessing game.

Despite the rooms for improvement, this step toward a legally enforced and market-based reduction mechanism is certainly a milestone. We will see the compliance in near future. And with it, clearer days ahead for Beijing and other major cities.