China to establish national carbon market
China, the world's largest emitter of greenhouse gases and the second largest economy in the world, has announced plans to create a carbon marketplace in an effort to cope with the infamous smog and other environmental problems plaguing communities throughout the country.
The New York Times reports that the market will be ready for the buying and selling of carbon in 2016. China is on the forefront of national efforts to institute policies known as cap and trade to limit greenhouse gas emissions. Australia previously had such a policy, but a change in government led to most of that program being rolled back or cancelled.
Cap and trade refers to a system wherein companies are fined by the government for going over limits on carbon output. However, a company can avoid these fines if they buy the spare carbon capacity of a company that is below its carbon limit. This creates a double incentive to limit greenhouse gas emissions because firms will want to lower their carbon output so they can sell their excess capacity on the open market. Companies will also lower their greenhouse gas output so they don't have to pay fines, or buy extra capacity.
The Times reports that the marketplace will be formed utilizing the best practices of a number of regional carbon marketplaces that have already been created.
China is not the only country in East Asia to take global warming seriously. The Times notes that South Korea, Indonesia, Thailand, and Vietnam are all also developing plans for their own carbon marketplaces.
China may need the system more badly than other nations. The smog and air problems in China are legendary. When the conditions are bad enough, it can seem like night time during the middle of the day. When Beijing hosted the Olympics in 2008, a part of their preparation was the deployment of trucks to spray chemicals that would remove the smog from the air.
