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China, which accounts for about a quarter of the world's carbon dioxide emissions, has pledged to introduce a national carbon emissions trading system by 2017, with eight industries singled out to kick off the program.
Ahead of that start-up, seven areas across the country, including Shanghai, have been operating pilot projects in so-called "cap-and-trade" since 2011 consecutively.
Such systems, which have already been adopted in the European Union and California, set a cap on total emissions and assign quotas to companies and industries within that cap. Companies that pollute below their quotas may sell any surplus carbon credits to bigger polluters. Carbon dioxide is a main culprit in global warming.
Last year, under the pilot programs, about 40 million tons of carbon emissions were traded, valued at about 1 billion yuan ($150 million).
The National Development and Reform Commission recently released a report that the average carbon prices in the pilot projects in the last three years have been 10 yuan to 40 yuan a ton. That is considered too cheap to propel a national strategy to promote emissions reductions. To create the green society envisioned for 2030, the price will have to rise to 53 to 252 yuan a ton.
The nation has been making efforts to popularize the system. However, participating companies reckon it hardly an incentive to upgrading technology but only a method of reorganization for traditional industries.
Chinese government will assign 10,000 companies across the nation with carbon emission quota starting next year, but traders and manufacturers expect the market will still be limited.
To involve advanced innovations in carbon trading, the government needs to know how big the companies can reduce their carbon footprint with the help of new technologies, said industry experts. Thus a calculating method of carbon emission should be developed and made for tailored company demand to measure their carbon surpluses.
Many companies in China seem wary about the program, unsure whether the government is following fast enough on new innovations and confused about what kind of energy-saving technology might reduce it.
Confusions among participants
Shanghai Jiaoyou Diamond Coating Co, which has developed a diamond die technology for making wires and cables more energy efficient, said the company currently isn't selling its products based on their ability to reduce carbon footprints.
"It takes too long to go through all the regulation channels," said Wang Xinchang, who works for company founder Zhang Zhiming. "Besides, who knows whether Chinese industries will care much about it or not?"
Working with graduate students from Shanghai Jiao Tong University, Zhang has focused on developing the diamond technology for several decades. He said carbon trading is still "too narrow a field" to wade into at present. He has devised no methodology to calculate the level of carbon emissions customers can save by buying Jiaoyou wires and cables.
Over 60 percent of the company's customers come from abroad, including leading cable manufacturers Prysmian Group, Bekaert SA and the Sandvik Group. Although Jiaoyou Diamond's product prices are more than fivefold higher than the industry average, buyers from around the world are interested in their energy-saving properties.
Prysmian told Zhang that the cables have helped the company reduce its carbon footprint under the EU Emissions Trading System.
Back home, Zhang's technology hasn't caught on, in part because the government hasn't released enough details of the carbon-trading scheme to allow industries to measure or calculate their emissions and contemplate their options.
Li Chen, who co-founded a carbon trading fund management company called Shanghai Treasure Carbon New Energy Environmental Protection Technology Co, said traditional industries are more likely to be involved in cap-and-trade than new technology companies.