1 / 19

A Grand Chinese Climate Scheme

Delve into China's ambitious climate scheme, shifting from top-down Accord pledges to a strategic market play. Explore China's emission intensity targets, CDM history, and the impact on the global carbon market. Uncover how holding back credits can propel domestic markets and foster renewable energy advancements. Witness China's withdrawal from CDM as a catalyst for global emission reductions and market shifts. Discover implications for stakeholders in a carbon-constrained world. Join the journey towards a greener, sustainable future.

wolfee
Download Presentation

A Grand Chinese Climate Scheme

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. A Grand Chinese Climate Scheme Dr. Soren E. Lütken UNEP/Risoe Center 26 May 2011, Beijing

  2. Something happened in Copenhagen... • Top-down to bottom-up • pledges to the Accord • China minus 40-45% emission intensity • India minus 25% emission intensity • 40 non-Annex I countries have submitted pledges – NAMAs – 18 with quantitative emission limitations • only 20% or 10Gt CO2 without limitation

  3. China Constructive... • Objective no. 1: Benefit Chinese economy • technology development and deployment • Objective no. 2: Benefit the Chinese environment • China’s National Climate Change Programme 2007: “blaze a new path to industrialization” (Ma Kai)

  4. So where do emissions fit in...? • A driver of new global technology markets • China wants to be a major supplier • A driver of international politics • China wants to play its role • A market in itself • China is already leading in CDM

  5. China’s CDM history • Cautious approach • only Chinese ownership of projects • regulation based on a Chinese version of the PDD • No CERs approved post 2012 • Hence China in full control of the post-2012 carbon market

  6. Is there any market...? • EU ETS the only game in town • becoming restrictive • prioritizing LDCs • history of ‘raids’ against Chinese CERs and/or industrial gasses • Japan, US, Australia, New Zeeland, Canada....

  7. Market estimates (2010) ...

  8. The Chinese choice • Surplus supply = falling prices • option 1: sell at 0 • option 2: not sell – also at 0 • Option 1 helps Europe out, no gain for China • Option 2 brings several advantages

  9. The climate scheme chapter 1 • Precautionary measures come in handy: • Projects approved on the basis of a Chinese PDD • No CER approvals in Chinese LoAs post 2012 • CDM projects must be in Chinese majority ownership – large majority in state ownership

  10. The climate scheme chapter 2 • Holding back the credits may jump-start a domestic Chinese carbon market • the carbon exchanges are ready • the 12th 5-year plan endorses it • It will help meeting the 40-45% intensity target • 340 million CERs/y ~ 15% of the target • (but ~ 50% of a European 30% reduction)

  11. The climate scheme chapter 3 • Holding back the credits will create credit shortage in EU ETS • LDCs may deliver 50 million CERs/y • Increased domestic reductions necessary = • Increased investments in renewable energy technology

  12. The climate scheme chapter 4 • Holding back the credits will create a larger demand for renewable energy technology • from China... • Thus China can exchange a low cost European carbon market for a larger market for Chinese renewable energy technology

  13. Any downsides? • No legal issues – all projects are Chinese owned and no contracts are violated • From one state pocket to another • The loss from CERs may partly be regained in the domestic market (if CER prices tumble anyway - at current prices about 250 million €/month) • China may just as well take the reputational bonus from withdrawing now than suffering from a European exclusion later

  14. Chapter 5 with a twist • Now the CER price suddenly went up – thanks to Chinese withdrawal. • LDCs (Africa) benefit – thanks to China • 100 Chinese projects in Africa by 2012 (Sharm-el-Sheikh 2009) • Chinese technology to Africa for CDM projects, regaining part of the lost CER revenue at much higher prices

  15. And a happy ending too Chinese withdrawal from CDM • Leads to major additional emissions reductions • Helps China meet its own intensity target • Creates a market for Chinese technology • Accelerates investment and technological development in Europe, and • Increases project development in Africa

  16. And even more intriguing... • China can make this happen all by itself • The world can only congratulate China stepping up to the plate • The global climate will be the true winner

  17. You can imagine why this story line was not popular with the carbon traders... • So for tomorrow ...

  18. When regulating for energy investments in a carbon constrained world: Choosing among stakeholders • Power utilities • Technology suppliers • Consumers • Carbon traders • Industry • International climate negotiation partners • International trading partners (e.g. oil and coal suppliers) • Forestry • Transporters • REVENUE PRESERVATION – the finance minister • And timing ...

More Related