China's carbon price

 From a Twitter feed by Simon Holmes à Court [lightly edited]

Yesterday, 16 July, China introduced a national carbon trading scheme, based on lessons learnt from pilot programs run in 7 regions between 2013–2020.

The average carbon price in the pilots since 2013 mostly moved between RMB 20-40 (A$4.17–8.34)[US$3.09-$6.17; Europe's carbon price is currently +-US$64].

To start with, the national scheme only covers ~2200 power companies, collectively responsible for ~40% of china's emissions.

Companies that pollute more than a given emissions intensity will be required to purchase carbon units, companies that pollute less can sell credits.  [This is interesting--it's not an absolute limit on emissions but a relative limit, in line with China's target to cut carbon intensity, i.e., carbon emitted per unit of GDP. Carbon intensity may fall even as total emissions rise, if economic growth is high]

The intention is to expand the scheme to include the sectors responsible for the vast majority of CO₂ emissions:

In the first day of trading, "a flurry of trades sent prices surging".   Carbon units opened at RMB 48 (A$10) per tonne, and 4.2mt traded as high as RMB 52.80, where it hit a price cap — prices are not permitted to rise by more than 10% per day.

No doubt china's scheme has plenty of shortcomings, and it won't slash their massive emissions overnight…

But it's ironic (& sad) that "communist" china has emissions trading, while Australia's "free market" gov't destroyed our scheme as their first order of business in 2013/4.

If @HonTonyAbbott, assisted by @Barnaby_Joyce, hadn't killed australia's emissions trading scheme, we'd have just begun our *tenth* year of carbon pricing.

…and Australian farmers would be "exporting" millions of tonnes of CO₂ credits to the EU for ~$80/tonne.

Instead, Australian manufacturers are facing the very real prospect of a carbon border adjustment mechanism #CBAM from both the EU and US. Australia will be subject to a carbon tax — it's just a matter of time — but it won't be on our terms, and the funds will flow offshore.

It's crystal clear. Either we will pay a carbon tax to ourselves (if we introduce one) or we will pay it to other countries (on our exports). And other countries will make the same calculation, which means that, step by step, other countries will also introduce their own carbon taxes, until every country in the world has a price on carbon. Except, possibly, Australia.

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