JUNE 16, 2021
By Paul Homewood
This bit of news may all sound a bit arcane, but it is actually hugely significant:
Authorities have limited the scope of a carbon-trading scheme as driving growth takes priority
China’s top economic planners have put the brakes on attempts by environmental officials to reduce carbon emissions as driving growth takes priority over meeting climate targets for now, according to people familiar with the matter.
Officials at China’s main economic planning agency, the National Development and Reform Commission, have limited the initial scope of a national carbon-trading system, which is set to go into full operation later this month after pilot projects in eight Chinese cities.
The economic planning office has also gained the upper hand in negotiations over drafting a detailed road map to fulfil leader Xi Jinping’s pledges to achieve a peak in carbon-dioxide emission before 2030 and net zero emissions by 2060, the people said.
The environmental ministry has risen in prominence over the past decade and had in recent months appeared to be newly empowered to exert more influence, but the recent developments show the economic agency, which sets China’s energy and emissions targets, still has greater clout.
The dynamic of competing environmental and economic priorities is hardly unique to China. Lawmakers in the U.S. have blocked attempts to pass a national cap-and-trade market for carbon emissions over concerns about the impact on businesses and the economy, although California and states in the northeast have adopted their own systems.
China’s actions are being closely watched as the world’s largest carbon emitter. Mr. Xi has said that China will reach a peak in its carbon emissions before 2030, but he hasn’t elaborated on how the country will achieve that goal.
U.S. climate envoy John Kerry has urged his counterpart Xie Zhenhua to pursue more ambitious climate actions in the near term, but hasn’t said specifically what he is urging China to do. Leaders of the Group of Seven nations are expected to discuss putting pressure on China to reduce its financing for coal projects overseas when they meet this weekend in the U.K.
After Mr. Xi’s pledge in September, one of his top lieutenants, Vice-Premier Han Zheng, called in October for environmental officials to accelerate the launch of a national carbon market and formulate a carbon road map, signalling to Chinese policy observers that they would be charged with drafting the plans for meeting the targets.
But in March when China’s cabinet enumerated the bodies charged with drafting the road map, the economic planning agency was listed first—not the environmental officials. Beijing also set up a group of high-level party members last month to cut across bureaucratic structures, issue guidance and oversee the road map. Three out of the five members of its leadership were senior economic cadres.
Separately, when the environmental ministry released the initial rules for the emissions trading system in December, they were more limited than initially proposed.
The scheme will, for instance, involve only about 2,200 companies in the power sector, which is responsible for an estimated 30% of China’s total emissions, instead of the 6,000 companies from eight sectors that were in the initial proposal.
Rather than the absolute caps on emissions proposed by environmental officials, Chinese companies will start off with relative allowances, using benchmarks based on previous years’ performances, giving them more wiggle-room.
Behind the scenes, economic planners had weakened provisions of the scheme, fearing the potential impact on growth, according to people familiar with the matter.
What it tells us is that the environmental lobby in China is toothless, the proverbial paper tiger.
I have always had doubts about the power and independence of the green lobby there. After all, we know that no organisation is truly independent of the state, or at least not for long! This news does indeed confirm that they are little more than window dressing, there to impress western governments than wield any real power.
When the chips are down, China will always put the economy first.