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China proposes plan to curb emissions

September 12, 2006 By David Cyranoski This article courtesy of Nature News.

Trading scheme could finally lower sulphur dioxide levels.

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China is renewing its promise to reduce sulphur dioxide emissions, with a plan that would see power plants paying for, and trading, the right to emit the pollutant.

A similar trading market in the United States, established under the country's Environmental Protection Agency, has had a huge impact, reducing emissions of the acid-rain-causing gas by 31% between 1993 and 2002.

So far, China's attempts to lower pollution emissions have failed, according to a government report released on 26 August. Instead of the 10% sulphur dioxide reduction they had planned for 2001 to 2005, emissions jumped up 27% over this period.

People have an incentive to build them but not to operate them.
Jianyu Zhang
China program manager for Environmental Defense.
That makes China the world's largest sulphur dioxide emitter, pumping out 25.5 million tonnes of the gas in 2005 (compared to US emissions of roughly 15 million tonnes). According to Xinhua News Service, the official government news provider, one-third of the country "was bathed in acid rain last year". The State Environmental Protection Agency estimated RMB500 billion (US$63 billion) in related economic losses.

Now the country is taking a shot at a revised goal, hoping to reduce emissions by 10% from 2006 to 2010.

Cutting sulphur dioxide emissions could have a warming effect on the planet these particles currently reflect sunlight back into space. But fears about respiratory and cardiovascular disease, ecological impact, and harm to crops are deemed to outweigh this concern.

Cap and trade

The details have yet to be hashed out. But Jinnan Wang of the Chinese Academy for Environmental Planning, a body that advises the government on energy affairs, gave a preview of the plan at a City University of Hong Kong symposium entitled 'Emission trading in China: from concept to implementation' on 30 August.

In the proposed scheme, power plants would have to pay RMB630 for every metric tonne of their emissions up to a 'cap' value. Plants that come in under their target would accumulate credits that can be used for future emissions or sold to other companies. Those that miss their targets (without having bought extra credit) would pay a stiff penalty of RMB4,000 for every excess tonne.

It has been estimated that the caps needed to attain the 2010 goal would cost power companies some RMB7 billion a year, which would raise prices for consumers by 6%. The plan, now under consideration by power companies and government agencies, is expected to be released late 2006 or early 2007.

What hasn't been worked out is how to set or enforce such caps. Fuqiang Yang, an energy expert who heads the Beijing office of the Energy Foundation, a San Francisco-based non-profit organization, says much of China's emissions are from small generators, of which more than half probably do not have monitoring devices.

Still, Jianyu Zhang, a programme manager for Environmental Defense, a New York-based non-profit organization that was instrumental in promoting pollution-trading schemes in the United States, is optimistic. A pilot programme that he helped to introduce in 2000, in four provinces and three cities including Shanghai, introduced the concepts of government-granted emissions caps, permits and trading.

One of the provinces, Jiangsu (where, incidentally, the country's first carbon trading between companies went into effect in July 2003), is expected to be the one of the first provinces to meet its sulphur dioxide reduction target of 10%.

Mixed success

China has had mixed success with environmental matters in the past. Power companies have been paid to install flue gas desulphurization (fgd) technology, which can reduce up to 90% of sulphur dioxide emissions. But the August report showed that 60% of these devices are not working properly. "People have an incentive to build them but not to operate them," says Zhang.

Yang says the main problem has been a lack of a mechanism to force power companies to comply with any rules. "I hope the regulation system will be stronger in the future," he says. China is getting to the point that people can sue such violators in the courts, he says, but there are not enough judges to try the cases.

Zhang says there is a lot to debate about the final plan and its implementation at a national level. Still, the country will probably make flue gas desulphurization mandatory, he says. And stricter enforcement policies will make it possible to hit the 10% reduction target. "They might disagree about how to do it, but a lot of people on the ground are trying to make this happen," says Zhang.

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