mead cohen berger shevtsova garfinkle michta grygiel blankenhorn
China Caps Carbon


China has just launched its first cap-and-trade experiment in Shenzhen, one of seven cities singled out for pollution cuts by 2014. The policy starts today in Shenzhen, and will then be rolled out in Beijing, Shanghai, Tianjin, Chongqing and the provinces of Hubei and Guangdong. If the program is successful in these areas, China plans to apply this policy countrywide and hopes to see a major drop in emissions. The BBC News reports:

“The Shenzhen Carbon Exchange will cover 635 industrial and construction companies. A previous statement from the exchange said it expected to add transport firms as well as all major companies that consume oil, gas, coal and power.

Beijing is aiming to reduce the amount of carbon dioxide emitted per unit of gross domestic product by 40-45% from 2005 levels by 2020.”

It’s understandable that China wants to cut its carbon output. The more China grows, the more it needs foreign oil—and needs American naval power to keep the oil flowing and the tankers moving. If China can lower its dependence on fossil fuels, be it through cap and trade or some other means, it will also increase its independence from the US, something greatly desired by Chinese leaders.

But while China’s motives are understandable, cap and trade may not be the answer. When Europe first launched its program, policymakers handed out a “glut of permits” driving carbon prices down from $40 to $9 per ton, thanks in large part to corporate lobbying. In the US, a group of northeastern states implemented a cap-and-trade policy, but rather than drive down carbon usage, it made profits for the states, according to the Washington Post.

If cap-and-trade policy ran into these problems in the West, where transparency is high, it’s likely to fare worse in China. Local and regional corruption is rampant in China, and massive programs like this will offer plenty of opportunities for graft by cunning local politicians.

Whatever happens, China’s move doesn’t vindicate propositions for a global carbon treaty. China is acting in its own perceived best interest, and any advances in green policy will have to come at the domestic level. A global treaty is still dead on arrival.

[Man wearing a mask in Beijing image courtesy of Getty]

Features Icon
show comments
  • Kavanna

    Not a smart move. The best thing is to just tax pollution. After that, plant trees, lots of them.

  • Andrew Allison

    I’m a little surprised that VM didn’t reference its is previous discourse on the utter failure of cap-and-trade.

  • Corlyss

    They’re going backwards. Carbon trading, carbon sequestration, all scams.

  • Douglas6

    Shenzhen doesn’t have heavy industry, and its power all comes from nukes. The air pollution in Shenzhen (and the air in Shenzhen is far, far cleaner than Beijing or Shanghai) is largely from automobiles. My guess is that this cap-and-trade policy serves two purposes: (1) propaganda – telling the West how environmentally conscious China is, and (2) it’s a tax source for a municipal government that has no power to levy income, sales or real estate taxes.

  • lukelea

    I think you are right about the opportunities for corruption. And the Chinese aren’t shy about taking advantage of such things. Someone observed that the Chinese are highly intelligent when taken one, two, or three at a time but that when in large numbers they can do some really wild and crazy things.

    • rheddles

      “Someone observed that the Chinese are highly intelligent when taken one,
      two, or three at a time but that when in large numbers they can do some
      really wild and crazy things.”

      And this makes them different from other ethinc groups in what way?

© The American Interest LLC 2005-2016 About Us Masthead Submissions Advertise Customer Service