Emission trading is taking a funny turn. Having long been the policy mechanism of choice for the governments of developed countries, plans for emission trading schemes are falling by the wayside due to powerful industry lobbies and vocal climate sceptics fuelling public opposition.
In April this year, Australian government finally ditched its proposals for a cap-and-trade scheme, with then Prime Minister Kevin Rudd confirming that the idea will not be revisited until 2013 at the earliest. The climate legislation had twice failed to win the support necessary to pass through Parliament and on the eve of a third attempt was abandoned by the government in the face of waning public support.
The latest casualty is the planned US emission trading scheme, which has now been taken out of the climate bill, the US choosing instead to focus on stricter regulation of the power sector in the face of the BP crisis. Obama pledged “to keep pushing for broader reform” but with no timetable set for a renewed push on wider climate change legislation it is highly unlikely that emissions trading will appear back on the agenda this year.
It may come as a surprise, then, that China is moving in the opposite direction. Murmurings are that a domestic emission trading scheme is in the pipeline for launch within 5 years.
This would help the Chinese government meet its target of cutting energy intensity by 40-45% between 2005 and 2020; the nation is reportedly already struggling to achieve an earlier target to cut energy intensity by 20% between 2006 and the end of 2010, with the reduction figure currently hovering around 15%.
It would also help move China away from its reliance on coal and would stimulate internal investment in low carbon technologies, creating jobs and pushing the country further ahead in the race to unlock green growth.
No wonder then why British carbon credit exchange firm Climate Exchange CLE.L have just announced an agreement with a Chinese partners to launch an emissions trading firm in China. The smart money seems to be on China delivering the goods on emissions trading ahead of both Australia and the US.