Latest Articles by Xie Yanmei

Stand-off in Beijing

Yanmei Xie — Wed, 17 Feb 2010 16:25:00 +0000

A heated debate in the Chinese capital exposed the social impacts of waste management decisions. Xie Yanmei reports.

Last August, dozens of cars filed out of a gated housing compound in a northern Beijing suburb and paraded through the surrounding streets. Slogans plastered on the vehicles read: “Resolutely oppose garbage incineration.” Just a few days before, the protesters found out that the government had decided to build a waste-to-power plant at A Su Wei three kilometres west of their homes.

Both sides of the debate over China’s rubbish incinerators – discussed previously on chinadialogue by Ma Jun (see “Solving the incinerator uproar”) – agree that sorting and waste reduction have to feature much more prominently in garbage management, but many questions remain. Slashing the creation of waste is a goal that everyone can applaud. After that, the agreement breaks down. Some argue that thorough sorting and recycling can turn most trash into resources. Others say that the majority is unusable rubbish, and that burning waste for electricity is the best way to reduce the amount of solid waste.

Wei Panming, deputy director in charge of Beijing’s cityscape, said that the city’s garbage output will stop growing by 2015. The districts that exceed growth limits will see their waste-processing fees soar. “You can pay if you are rich,” he said, “or you can reduce the amount of your waste.” Beijing will build more waste-fired power plants, Wei added, and the city will do everything “to maximally protect the interests of neighboring residents.”

However, some city dwellers, such as those near A Su Wei, are not convinced. In addition to public demonstrations, the residents compiled a well-researched report arguing against garbage incineration and sent it to government officials and reporters. “We want to defeat incineration on the policy level,” said Bai Fuqin, a chief organiser of the protest, who asked to use an alias.

Burning trash out in the open or in small furnaces is a practice with a long history in China. In 1985, the southern city of Shenzhen built the country’s first garbage incinerator that converts the heat into electricity. Since then, the government implemented a series of policies, including tax credits and subsidies, to encourage waste-to-power projects. By the end of 2008, there were over 70 incinerators across China. The current number is not known, but certainly many more are in the planning stages.

But protests have spread with the incinerators. Last October, thousands of people blockaded a newly-built incinerator near Wujiang, a city on the eastern seaboard, and forced the government to halt its operation. In November, public demonstrations near the southern metropolis of Guangzhou saw the government delay a waste-to-power plant for further environmental study. In December, residents near Shenzhen, also in the south, protested the building of a third incinerator near their community.

Most public concern is about a family of toxic chemicals called dioxins, which can be generated through combustion. The toxins can damage human immune systems, as well as nervous systems. Some studies show chronic exposure to high levels of dioxins can dramatically increase the risk of cancer among humans. “I have a one-year-old child,” said Tan Sitong, another A Su Wei anti-incinerator activist, and who also uses an alias. “Taking in such toxins will have the most impact on him when he’s growing.”

Advocates for incineration say the public’s fear of dioxins is often based on misleading information from sensational media reports. Dioxins can be reduced to a level that is safe to human health, said Xu Haiyun, chief engineer at the China Research Society of Urban Development. “Technologically there’s no problem. There are many mature cases in the United States and Europe to prove that… Taiwan and Macau also have successful examples.”

According to the World Health Organisation, there is a level of exposure to dioxins below which cancer risk would be negligible. China requires that incinerators discharge no more than one nanogram of dioxin per cubic metre. The European Union sets a standard that is one-tenth of that amount.

Beijing officials say that waste-to-power plants will be built according to EU standards.

But that does not placate incineration opponents. “So what if they can reach the EU benchmark?” asked Zhao Zhangyuan, a researcher on environmental protection at the Chinese Academy of Sciences. He has emerged as a leader of China’s anti-incineration movement. Dioxin can stay in the environment for hundreds of years and accumulate in human bodies, therefore, “no one can guarantee that the EU standard won’t be harmful to human health.” And to meet the requirement, “the prescribed procedure has to be strictly followed,” said Zhao. “But in our country, abnormal practices often happen in such a complicated operation.”

Certainly in a number of fields, there are documented examples of companies cutting corners and government officials turning their heads the other way. Even supporters of incineration admit that it is not enough just to import western technology.

Two-thirds of Beijing’s rubbish, said Wei Panming, the city planning official, is kitchen waste. That means the garbage is moist and generates less heat than other types of solid waste. To minimize dioxin, it is critical to keep the temperature in the incinerator above 850 degrees Celsius. Companies therefore often add coal or diesel for extra heat, which costs more and generates more greenhouse-gas emissions. Critics of incineration say there is no trusted body in China to make sure companies are doing the right thing.

The fierce debates on incineration have sometimes turned personal. Some supporters of incineration call Zhao a hoax. Opponents dub scholars like Xu “unscrupulous experts” bought off by business. “Their interests are connected,” said Bai, the activist at A Su Wei, referring to what he considers expert-industry collusion. “There’s no-one to counterbalance them other than the public. And the information available to the public bears no comparison to theirs.”

Public opposition makes it difficult for companies and investors to plan for the long term. “Those in the industry feel confused,” said Wen Yibo, CEO of Beijing Sound Group, which runs the A Su Wei garbage-processing facility. “The government hasn’t stood up and spoken about garbage incineration. Is waste-to-power good or bad? When problems arise, the government seems to be speechless.”

Each side of the debate is looking to the central government for support. Those in the pro-incineration camp are calling for more efforts in a propaganda campaign to inform and educate the public. The opposition wants the government to stop giving financial incentives to waste-fired power plants.

But so far, dramatic policy changes look unlikely. “Turning garbage into a resource and using it is a good thing for sure,” said Xue Huifeng, director of the legislative office of the National People’s Congress. At a Beijing conference on solid waste processing, he said problems surrounding incineration mostly come from the enforcement of the policies, rather than the policies themselves. He affirmed that the government will continue to support waste-to-power. “But I’m talking about giving support according to the law,” he said. “Companies that don’t follow the law certainly won’t receive support.”

That may explain why, at a recent meeting, Beijing officials told A Su Wei residents that they will “resolutely” continue pushing for the building of the incinerator. Hence the struggle continues. “You can talk about governing by law,” said Bai Fuqin. “We can fight for our rights by law.”

Xie Yanmei is a Beijing-based freelance reporter

Homepage image from longquanzs.com

Security alert

Yanmei Xie — Thu, 25 Mar 2010 15:15:00 +0000

The US government’s recent defence review shows new levels of attention being given to climate change. Xie Yanmei talks to two experts about the implications.

The United States’ Department of Defense has started studying the implications of climate change for national security and military planning. Its Quadrennial Defense Review (QDR), released in early February, concludes that climate change may exacerbate poverty, food and water scarcity, the spread of disease and mass migration and “may act as an accelerant of instability or conflict”. It says that extreme-weather events may place a further burden on the US military to provide disaster response around the globe. The report also outlines an intensifying focus from the armed forces on cutting fuel consumption and finding alternative energy sources.

In their working paper, “Promoting the Dialogue: Climate Change and the Quadrennial Defense Review”, Christine Parthermore and Will Rogers of the Center for a New American Security argue that the QDR is the first step towards a military strategic roadmap for operating in a world with a changing climate.

Xie Yanmei: Can you talk briefly about the process of the QDR?

Christine Parthemore: It’s a report that the Department of Defense is legally required to conduct every four years. They talk to all the experts inside the department and work with academics and other experts outside the government. They project what future needs the department is going to have and think through the problems the department might confront over the next four years and into the future.

XY: What role does it play in the decision-making process both for the Department of Defense and for Congress?

CP: It lays out the general framework and provides a direction for more specific decisions. It sets out a vision for how to consider issues like climate change, nuclear proliferation and US missile-defense posture. So it is the starting point for building up more detailed plans and strategies.

XY: Specifically, how does the review suggest climate change will impact US security and how does it see the US military adapting to a changing climate?

CP: It says that climate change is going to combine with other trends, such as economic and political trends, around the world. It doesn’t claim to know what future threats might come out of it or where instability is most likely to happen, but it does say that, in the near term, climate-change effects such as sea-level rise or drought could impact some of the areas where the military has large installations.

XY: Does the review outline specific strategic changes that the US military will make?

CP: No, it tends not to do that. There are other tools to mark changes in direction, like the budget. The QDR sets a baseline vision in line with the president’s thinking and tends not to be too prescriptive.

XY: In your paper, you talk about the institutional changes the Department of Defense has had to make in order to study the implications of climate change. Can you explain?

Will Rogers: I think one of the unintended and positive consequences is the nascent intellectual infrastructure that has developed within the department to look at issues related to climate change. It has become the springboard for communicating to the science community what kind of information they are going to need and, specifically, what kind of data the national-security community finds useful.

XY: How likely is it that the message of the QDR will change the global position of the United States? Will there be more competition between the US and China for energy, for example? Will it prompt more cooperation between the two countries for solving global crises related to climate change?

WR: I think it’s interesting to look at what the QDR says about using climate change as a touch point for possible cooperation with the Chinese military and other military around the world. The Department of Defense has a history of using environmental cooperation to build military relations with other countries. I think climate change offers potential opportunities to further this type of engagement.

XY: In your working paper, you mention that the Department of Defense sees cutting greenhouse-gas emissions as part of its mission. What has it been doing to reduce its carbon footprint and has the QDR outlined further steps for this goal?

WR: The department has been looking at what it can do with its domestic installations in terms of increasing energy conservation and efficiency to reduce its fuel consumption and carbon footprint. At the service level, the air force and navy have been looking at different technological developments and different types of fuel that they can use to shore up energy security and, to some degree, reduce their carbon footprint.

XY: The US military has a history of spearheading advanced technologies, which are later transferred to the civilian sector. Do you see this happening with clean-fuel development?

CP: Yes, I think the interest in doing so is increasing. The air force has been testing alternative fuels. The Defense Advanced Research Projects Agency [the research–and-development arm of the Department of Defense], is looking at algae-based biofuel. They are really good at creating new things that meet needs unique to their missions. But energy is ubiquitous. It goes far, far beyond the Department of Defense.

XY: President Barack Obama is very interested in addressing the problem of climate change. But let’s say the next president is a climate-change sceptic. Will that change how the Department of Defense views climate change?

CP: The Department of Defense writ large serves at the pleasure of the president, whoever that president is. Beyond that, though, it is made up of thousands and thousands of individuals. You find people with all kinds of opinions about what the military’s role should be and how the department should move forward on this. That’s why it is important to look at documents like the QDR, which reflects broad, general, internal thinking by the leaders of the department as well as the president’s priorities.

XY: What significance do you think the climate-change aspect of the QDR will have for the US military?

WR: I think integrating climate change into the QDR is only really the first step. Moving forward, we might see these issues have a bigger presence in other strategy documents in the department and at service level.

CP: You build security by thinking ahead about issues that are even remotely likely to become a security challenge in the future. This is one of the issues that require a lot of thinking ahead and a lot of that work is yet to be done. The QDR signals that effort is starting in earnest. And it means we have a better prospect of building security on related issues.

Xie Yanmei is a Beijing-based freelance reporter.

Homepage image from wikipedia shows the Pentagon, the headquarters of the US Department of Defense

America’s coal-fired debate

Yanmei Xie — Wed, 16 Jun 2010 11:28:00 +0000

Washington is pumping money into carbon capture and storage in a bid to soothe both green campaigners and industrialists. But battle lines between the two remain firmly in place, says Xie Yanmei.

Coal supplies the United States with almost half of its electricity and provides some 174,000 full-time jobs through mining, transportation and power-plant employment. It is also responsible for 32% of the country’s greenhouse-gas emissions. Unsurprisingly, this emissions-intensive industry has found itself at the centre of a fierce domestic debate about how to tackle the carbon footprint of the world’s second largest emitter without major economic sacrifice.

Politicians from coal-producing states – who need to protect mining jobs to ensure re-election – are pitted against those who advocate a speedy move away from fossil fuels towards clean energy like wind and solar. The tug-of-war between the two camps has fuelled support for “clean-coal” technology, or carbon capture and storage (CCS) – which many hope will provide a way past the political deadlock.

The ongoing tension over the future of the coal industry was on show in April at a Congressional hearing on the issue, chaired by Ed Markey, one of the chief authors of the climate-change bill passed by the House of Representatives, the country’s lower legislative body, last summer. If signed into law, his bill would mandate a 17% reduction in greenhouse-gas emissions on 2005 levels by 2020 and an 83% cut by 2050.

Speaking at the hearing, one Democratic party congressman, Jay Inslee, lamented that the world might be free of coral reefs and glaciers when his toddler grandson grows up, because the emissions from burning coal “are destroying significant parts of this one and only little planet we’ve got”. At the same time, his fellow Democratic party member John Salazar gave a glowing tribute to the coal industry for providing nearly 45,000 jobs in his state of Colorado – which has 11 coal mines – in the mid-western United States.

The divergence is symptomatic of the country’s differing regional interests when it comes to energy. In 2008, 45% of the country’s electricity came from burning coal, but in West Virginia – the number one coal-producing state in the United States – this source provided 97% of the state’s power. Coal mines and coal-fired utilities supply two thirds of the state’s business taxes. Ohio, a mid-western industrial state that is struggling with the loss of manufacturing jobs, gets 85% of its electricity from coal. On the other hand, the north-western state of Washington, where Congressman Inslee is from, is powered mainly by hydro-electricity and coal provides less than 10% of its power.

This gap in interests has led to an attempt to create what the Democrats call “a bridge to the future”, which would see coal plants, the largest source of global-warming gases, scrubbed clean through the use of carbon capture and storage (CCS). The bridge is paved with taxpayer dollars for the development of what proponents are calling clean-coal technology, a system that promises to capture greenhouse gases pouring out of smokestacks and store them underground.

The economic stimulus bill signed into law last year is pumping US$3.4 billion (23.2 billion yuan) into clean-coal projects, on top of hundreds of millions of dollars already provided in each year’s federal budget for the Department of Energy (normally in the range of US$500 million to US$700 million). In addition, the climate-change bill passed by the House of Representatives last year will set aside a clean-coal fund of US$50 billion to US$250 billion (342 billion to 1.7 trillion yuan). Meanwhile, president Barack Obama has set up a federal government task force to speed up clean-coal development.

Two senators from north-eastern states, Democrat John Kerry of Massachusetts and Independent Joe Lieberman of Connecticut, have also introduced their own version of the climate-change bill, which would have twice as much annual subsidy for clean-coal as the bill passed by the House of Representatives.

This generous “handout” to the coal industry is meant to address “regional inequality” says Trevor Houser, director of energy and climate practice at the Rhodium Group, a New York based think-tank. There’s no doubt that a climate-change bill will make burning coal more costly and its costs and benefits will spread unevenly across the nation, he says. Coastal states like California and Massachusetts have the most to gain from curbing the ills of climate change, such as sea level rise and ocean acidification, but coal-dependent interior states, like West Virginia and Ohio, will shoulder more cost of a bill. This latter group of states is so politically powerful, says Houser, that no climate-change bill can become law in the United States “if it doesn’t offer a pathway for coal to the low-carbon future”.

Supporters of coal say that a clean-coal future is within sight. Storing carbon dioxide underground is nothing new – oil companies already collect and inject the gas into old wells to force out additional oil. But there are barriers to widespread deployment, most obviously the high cost of the technology. The National Energy Technology Laboratory (NETL), run by the US Department of Energy, estimates that average electricity prices would jump by 30% to 80% in the United States if utilities were to adopt existing technologies due to the high levels of energy currently required to capture and compress carbon dioxide. NETL is working to make the process more fuel efficient with a view to limiting the rise in utility prices to 10% or lower. Deputy director of NETL’s clean coal Tom Sarkus, is optimistic that scientists will find a cheap and reliable way to burn coal cleanly, but believes “it will take another 15 to 20 years” to commercialize it at large-scale."

Even after the technical hurdles are cleared, there remains another vexing issue – ownership of the surface space beneath which carbon dioxide can be stored. Recent government efforts to build new electric transmission lines and an offshore wind farm have met vigorous resistance from property owners worried about the impact on their neighborhoods and property values. Unwilling to anger their constituents, lawmakers often side with provincial interests against national programmes. That may explain why, so far, there has been no serious legislative attempt to establish rules for picking carbon-storage locations.

Faced with this long list of challenges, Ed Markey is urging coal executives to stop spending millions of dollars fighting his legislation and invest in technological advancement instead. The timetable for emissions cuts detailed in Markey’s bill has already been scaled-back from the initial draft as a compromise to coal-state politicians. But coal-industry representatives are still unhappy and argue that Congress should wait for clean-coal technologies to mature before setting limits on emissions. Speaking at April’s hearing, Greg Boyce, chief executive of the world’s largest private coal company, Peabody Energy, said that the legislation will send utility rates soaring and inflict “punishing cost to our economy and family budgets”.

Some environmental groups are also feeling disgruntled. They say the bill makes too many concessions to the coal industry and devotes too much money to a polluting industry. An advertising campaign organised by a coalition of conservation groups aims to puncture what they perceive as the clean coal hype. One of their advertisements features an immaculately suited man with coifed silver hair holding up a lump of coal and claiming it to be clean. He sniffs the black chunk and exclaims: “It smells good, too,” only to leave a dark smudge on his nose.

One of the backers of the anti-coal ad campaign is the Sierra Club, the oldest grassroots environmental organisation in the United States. Its chief climate counsel, David Bookbinder, insists that a United States without coal-fired power is possible. He points out that, after years of work on energy efficiency, the state of California has kept its per-capita energy use flat for more than 30 years while the national average has steadily increased. “If we could move where California is now, not only would we not need a single new power plant of any sort, we could begin to close down all these dirty coal-fired dinosaurs,” he says.

The Senate bill has to compete for time and attention in a crowded legislative calendar and faces a fiercely partisan climate as the November mid-term elections draw near. It will need to win over all Democratic senators and at least one Republican. That means the legislation has to convince Senators from coal-dependent states that coal mines will keep hiring and that industry will keep humming on cheap coal.

Xie Yanmei is a freelance reporter based in Washington, DC.

Homepage image by afagen shows a poster from the Reality Coalition ad campaign, which suggests that clean coal – like the alien – is a fantasy.

Cap and gamble

Yanmei Xie — Mon, 01 Nov 2010 15:55:00 +0000

As prospects for a comprehensive climate-change plan fade in the United States, the world’s oldest voluntary carbon market is struggling to prove its relevance. Xie Yanmei reports.

The Chicago Climate Exchange (CCX), once hailed as a model of the market-driven approach to solving climate change, has become a casualty of the United States government’s inertia when it comes to dealing with this global problem. The experience of the country’s only voluntary, legally binding carbon market suggests that, rather than filling the void of federal actions, such institutions are destined to rise and fall with the fortunes of mandatory emissions-reduction schemes.

In early July, the parent company of CCX was bought by Atlanta-based IntercontinentalExchange (ICE) for US$622 million (4.2 billion yuan). According to Reuters, the new owner started cutting staff at the CCX within weeks of the purchase. CCX spokesperson Brookly McLaughlin said in August that ICE was closely monitoring the progress of carbon policy in the United States and evaluating whether to continue CCX operations “that would establish a reduction and trading programme extending beyond 2010”.

As it stands now, the CCX is non-operational. There has been no trading at the exchange for months. The price of its carbon financial instruments (CFIs), one unit of which represents 100 tonnes of carbon dioxide equivalent, hovers at a mere US$0.10 (0.68 yuan) each, compared to a historical high of US$7.4 (50.4 yuan) in May and June of 2008. Both buyers and sellers cite the political uncertainty surrounding US climate-change policy as the primary factor that is depressing prices and muting trading activities.

The roughly 400 participants of the CCX include Fortune 500 companies, such as Ford and DuPont, and governments including the state of New Mexico and the city of Portland. These members make a legally binding commitment to reduce their carbon emissions. Those who reduce emissions beyond their targets have surplus allowances to sell or bank. Those who fall short have to buy allowances in the market. Such emissions-trading systems are often dubbed “cap-and-trade”.

For years, conservation groups and environmentally minded politicians have promoted a central government cap-and-trade system as the most cost effective tool for stalling the progress of climate change. They argue that such a trading scheme would harness the power of the free market, spur competition and stimulate innovation. The ideas seemed to be making headway when major emitters, including the utility industry, got behind the concept. American Electric Power (AEP), one of largest power generators in the United States, is a founding member of the CCX. “Investors want to see companies respond in accordance with the direction of public policy,” explained Bruce Braine, AEP’s vice president of strategic policy analysis.

Yet to the dismay of carbon-trading supporters, president Barack Obama has made only token efforts towards making it law. The outlook brightened last year when a cap-and-trade bill gained the approval of the House of Representatives, the lower legislative chamber, only to darken this summer when the Senate, the upper chamber, abandoned efforts to pass any climate-change legislation before Congress went into recess. For the CCX, the latest development may not be “a stake in the heart”, said Henry Henderson, director of the Chicago office of conservation group the Natural Resources Defense Council (NRDC), but “it does hobble it somewhat in terms of delivering the benefits it is capable of delivering.”

For some participants, the benefits of trading in the voluntary market have become so meagre that they are eyeing the exit. “A market only works if you have buyers and sellers. For all purposes, the buyers have left the market,” said David Miller, chief science officer at AgraGate Climate Credits, an Iowa-based company, which is one of the exchange’s “aggregators”. This means the firm collects contracts from farmers who agree to adopt greenhouse-gas absorbing practices, such as converting cropland to grassland, and sell those contracts as carbon offsets. Emitters used to buy these offsets in the hope that they would later be recognised in a government-run, mandatory system. But, said Miller, as political will for federal actions has diminished, demand for offsets has fallen and prices have plunged. “It takes all the money just to do the paperwork – the verifiers, the registration fees. There’s no farmer interested in doing it at that price,” said Miller. His company is considering whether or not to continue operating next year.

Other than profits, a less tangible benefit such a voluntary market provides is a warm up exercise the participants believe will give them a “leg up” if and when the federal government introduces a mandatory structure, according to Henderson. “So it’s how do they get a handle on their emissions, understand their operations better and start doing a series of practices in terms of monitoring, reduction and participation in a verification structure.”

According to the CCX, its members collectively cut carbon emissions by 450 million tonnes since trading started in 2003. By comparison, the US economy put out a total of seven billion tonnes of greenhouse gases in 2008 alone. Henry Henderson pointed out that the CCX’s emissions-reduction feat is “marginal, as far as getting to the level of reductions required to avert an international catastrophe”.

Those associated with the exchange have never advertised it as a replacement for government action, but “as a large-scale demonstration project to explore the workability of carbon trading”, said CCX spokesperson McLaughlin. Moreover, its chairman and chief executive, Richard Sandor, has argued that the voluntary system has paved the way for a mandatory one. In an op-ed published last August in Roll Call, a Washington newspaper devoted to the affairs of Congress, he wrote: “The experience of the CCX has shown that cap-and-trade is not only doable — it is affordable and desirable.”

But some academics and environmentalists remain anxious that, if CCX serves as a prototype for a mandatory government regime, certain dubious practices – namely the trading of offsets – will be perpetuated. “My concern is that these voluntary markets are sending the exact wrong message to Congress,” said Kenneth Richards, associate director of the Center for Research on Energy and the Environment at Indiana University. “They designed an offset protocol that’s easy to use rather than rigorous.”

Under the CCX’s trading system, emitters can pay for carbon-cutting activities, such as burning methane at landfills or maintaining forests, if they fail to meet emissions-reduction targets. By nature, such activities are hard to monitor and verify, said John Riley, professor of energy, environmental and agricultural economics at the Massachusetts Institute of Technology. “If you buy wheat, you know when the wheat is delivered and you can see the wheat. If the wheat turns out not to have the protein content you expected or if there is too much chaff in it, you can observe that. If you buy carbon allowances, all you’ve got is some electronic thing that says you have carbon reductions.”

Although the CCX maintains that it ensures the integrity of offset projects by requiring that sellers of offsets obtain independent verification from a CCX-approved verifier, it has faced repeated criticism in this regard. A Washington Post article in October 2008, for example, reported that a Virginia landfill operator made tens of thousands of dollars from the CCX by selling offsets tied to capturing and burning methane, something the landfill had been doing long before trading started at the CCX. If the report is accurate, the offset practice violates the “additionality” requirement set by the exchange itself, which mandates that savings in greenhouse-gas emissions must be additional to those that would have occurred in business-as-usual scenario.

Despite continued scepticism about its effectiveness, and its uncertain future, the development of CCX has not been in vain, said Henderson of the NRDC: “CCX is useful in terms of outreach to part of the economic community and it has been able to reach out to public officials in ways that say how this is actually a beneficial business play for the world.”

The CCX has also been credited with introducing cap-and-trade to major developing countries. In 2007, it signed up a Brazilian state government as a member and three Indian companies as aggregators. ICE, the new owner, cited CCX’s international reach, especially in “[e]arly-stage growth markets with long-term potential”, as a motivating factor in the acquisition. In 2008, the CCX partnered with China National Petroleum Corporation Assets Management and the Tianjin Property Rights Exchange to launch the Tianjin Climate Exchange (TCX).

The experience in Chicago is guiding the TCX’s design. But unlike the Chicago shop, the Tianjin offshoot seems to have the political wind on its back. The China Daily, a state-owned newspaper, reported that a multi-ministerial meeting led by the National Reform and Development Commission made the decision to launch a pilot carbon-trading system during China’s 12th Five Year Plan, which starts next year.

But Tianjin faces even more daunting a struggle than Chicago to establish the credibility of the market. For one, China doesn’t yet have a system to quantify and register its carbon emissions and the government has refused to allow international verification of its emissions-cutting practices. The China Daily story also reported that Chinese officials plan to keep the pilot carbon market voluntary at least initially and that they are still debating whether to set caps on emissions. If the fate of the CCX serves as an indicator, the Chinese will soon learn that a voluntary market will hit its limits in the absence of government-mandated goals on emissions reduction.

Xie Yanmei is a freelance reporter based in Washington, DC.

Homepage image from the carbon catablog