China's carbon markets

Greetings from the Australian National University in Canberra, where a discussion of carbon trading is taking place. One participant expressed regret that Australia was scrapping its planned carbon trading scheme. Some governments have been suspicious of carbon trading (the Chinese Government changed from this view from around 2009, the new Australian government appears to be doing the reverse).

The Chinese Government decided to have pilot trading schemes, as there were already some local trading schemes run by local provinces and endorsing these as "pilots" allowed the central government to regularise the process. The pilots were all in economically developed regions. China's fifth was Tianjin emissions trading scheme.  Perhaps this voluntary pilot approach is one which could be applied in Australia, which the federal government would find palatable. Unlike China, Australia has good emissions from which to derive trading data.

Some of the Chinese carbon trading schemes make allowance for prior reduction efforts made by companies. This provides some form of credit so firms which have already made reduction efforts are not penalised compared to those which have not, before the scheme starts. Allocating generous credits to firms is also a way to encourage them to participate, where there are limited cohesive powers. However, excess credits can make the market unworkable (as has happened in Europe).

One other point to make the market work well is a futures market (which is not permitted in China, also buying and selling the same day is not permitted). One lesson from China is that it takes time to learn how to set up a carbon market and make require several attempts.

Australia's planned approach with a fixed price trading system, before a floating price was pointed out by some as being both a theoretically and practically workable system. It was pointed out that penalties for non-compliance were required. The Clean Energy Regulator (CER) threatened Clive Palmer MP's company,  Queensland Nickel, with legal action for non-compliance.

One suggestion was that perhaps carbon emissions should be addressed as an energy efficiency issue, as that is seen as more urgent and useful by the general public and politicians. 

Reflections on China's carbon markets

Dr Yue Tan David Tang, Deputy General Manager, Funds Department, Strait Energy Limited will speak on "Reflections on China's carbon markets", at the Australian national University in Canberra, 2pm, 4 April 2014.

Reflections on China's carbon markets

Crawford School of Public Policy | Centre for Climate Economics and Policy

Event details

Lecture

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Date & time

Friday 04 April 2014

2.00pm–3.30pm

Venue

Crawford Barton Theatre, J.G. Crawford Building (bldg #132), Lennox Crossing, ANU

Speaker

Dr Yue Tan David Tang, Deputy General Manager, Funds Department, Strait Energy Limited.

China is moving towards using carbon markets as part of its climate policy. The first emissions trading pilot schemes have started operation, others are following, and there are intentions for a national carbon market down the track. In this lecture, Dr Yue Tan David Tang, who has been involved with the design of the Tianjin emissions trading scheme and other aspects of Chinese carbon markets, will discuss carbon pricing in China. He will give an overview of policy development for emissions trading; analyse some of the features of the emissions trading pilot schemes; and present his reflections on the opportunities and obstacles to carbon trading in China.
Dr Yue Tan David Tang is Deputy General Manager of the Funds Department at Strait Energy Limited, which is a Hong Kong based investment company focusing on oil and gas as well as renewable energy. Dr Tang was formerly Secretary of the Board at the Tianjin Climate Exchange, where he took a leading role in designing and helping launch the Tianjin Emissions Trading Scheme. His work focuses on regional ETS development, trading in voluntary emissions reductions, natural gas market research, and policy analysis. He has taken part in many government-sponsored consulting and research projects on China’s carbon markets. Dr Tang holds a BA, an MA (pure math) and an MS (financial engineering) from Columbia, a JD and a PhD (econ) from Harvard. He is also a member of the New York Bar.
This seminar is presented by the Centre for Climate Economics and Policy at Crawford School of Public Policy at The Australian National University.