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ILN Today Post

China’s Emerging Carbon Emissions Quota Trading System

With its emergence as the world’s leading emitter of greenhouse gasses, China is facing increased international and domestic pressure to substantially reduce its carbon emissions.  Following China’s commitments made at the 2009 and 2011 United Nations Climate Change Conferences, the State Council and the National Development and Reform Commission each  issued official notices in late 2011 calling for the development of a carbon emissions quota trading system during the current, 12th Five-year Plan, including the enactment of appropriate legislation, the establishment of emissions calculation methodologies and verification procedures and institutions, and the development of quota trading platforms.  By the end of 2012, several municipalities and provinces had launched pilot projects to experiment with carbon emissions quota trading.  Each locality employs a different scope for participation in its system and a different method for allocating quotas.  Most plan to complete the preparatory phase of its pilot project and to subject its participating enterprises to carbon emissions quota trading requirements in 2013, though the relevant rules, including the punitive provisions, and quota trading platforms are still incomplete at this time.  In addition to the inherent challenges, China’s move toward sustainable development also will present opportunities for technological innovation, the development of new service industries and increased competitiveness.  At a minimum, businesses will be forced to regard carbon emissions as a key cost of doing business in China in the very near future. More…

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