GOV’T OFFICIAL: NO ‘OFFICIAL SCHEDULE’ FOR CARBON TAX IN CHINA

Tamar Hallerman
GHG Monitor
3/15/13

A Chinese government official this week walked back information from recent state media reports that said the government would soon implement a modest carbon tax on the country’s major emitters. When pressed about the prospect of a carbon tax following a March 13 speech at the World Bank, National Development and Reform Commission official Wang Shu indicated that while a tax may be in the country’s future eventually, there is “no confirmed official schedule.” “We are still researching what time is a good time and how to [implement such a] policy,” he said.

Citing a Ministry of Finance official, the Xinhua News Agency reported last month that the government would soon implement a carbon fee as part of a suite of new environmental tax reforms on resources like coal and water. While Xinhua provided few details in terms of potential prices or timelines, it pointed to a plan pitched by the country’s Finance Ministry in 2010 that called for a 10 yuan ($1.60) tax per ton of CO2 beginning in 2012, increasing steadily to 50 yuan ($8) per ton by the end of the decade. However, Bloomberg reported last week that the Chinese government will postpone the implementation of a carbon tax for at least the rest of the year due to ongoing internal discussions. A new analysis from Thomson Reuters’ Point Carbon this week concluded that China is not likely to implement a carbon tax this decade.

China Likely to Implement an ETS

In his remarks this week, Shu indicated that a national emissions trading scheme would be easier to implement in China than a carbon tax, and said the Chinese government is beginning to move forward on implementing a nationwide cap-and-trade system in the years to come. He said the government is currently conducting research on ideal reporting and accounting methodologies, and is also collecting data on different high-emitting sectors in the economy with the hope of soon developing some sort of legal framework for an ETS. “China is very active in reducing its future greenhouse gas emissions. In order to do that, we think we should choose the more efficient, low-cost policy to realize our GHG emissions [reductions], so we think carbon trading is the better option,” Shu said.

While China has rapidly built up its industrial and electricity generation sectors in recent decades, the government has also taken some steps in recent years to begin curtailing emissions. The government set a larger goal of reducing carbon intensity 40 to 45 percent below 2005 levels by 2020 and began gradually rolling out several cap-and-trade pilot programs in seven major cities and provinces at the beginning of the year—a program Shu said is going “very well.” State media reports said the government’s eventual goal is to implement a nationwide emissions trading program in 2016, but little data has been made publically available. Previous estimates indicate that if China does establish some sort of national cap-and-trade scheme, it would be the world’s second largest following the European Union’s.

Shu added that a challenge moving forward will be meshing together China’s traditional command-and-control implementation system with many of the free-market forces of cap-and-trade. “We have no experience with market-based approaches. We need to learn how to balance between markets and administration and how to regulate and manage those,” Shu said.