Clear The Air News Blog Rotating Header Image

Nation’s First Emissions Exchange Likely To Start Trading By End Of Year

Reuters in Beijing, Updated on Feb 20, 2009

The nation’s first emissions exchange is expected to begin trading by the end of this year as it works out trading procedures and recruits more member firms, a senior exchange executive said yesterday.

The Tianjin Climate Exchange was established in September, but acceptance has been slow among the small mainland companies that the exchange is trying to attract.

“We hope the exchange will start trading sulfur dioxide, COD [chemical oxygen demand] and energy intensity credits by the end of this year,” exchange assistant chairman Jeff Huang said.

The exchange was working on operational details with the central government and potential member companies before trading could kick off, Mr Huang added.

Beijing has long vowed to save energy and reduce emissions, setting a goal to reduce all emissions by 10 per cent from 2006 to 2010.

But to initiate active trading on the country’s only emissions exchange, Mr Huang said the mainland needed to change the way it allocated emissions credits.

Mr Huang is also vice-president of the Chicago Climate Exchange, which owns 25 per cent of the Tianjin exchange. An asset management unit of China’s top oil and gas firm, China National Petroleum, owns more than 50 per cent of the venture and Tianjin Property Rights Exchange owns the rest.

Emissions credits on the mainland are allocated by the central government to the provinces, which often ignore environmental regulations to focus on economic growth, which produces tax revenue.

Mr Huang said Beijing should hand out emissions credits to companies directly, bypassing local officials and, more importantly, giving firms the incentives to bring emission credits to market.

“Polluters can now cash in on their emissions credits at the exchange,” he said.

The Chicago exchange, run by Britain’s Climate Exchange, is a voluntary market that aims to reduce emissions of gases such as carbon dioxide that scientists blame for global warming.

The Tianjin exchange has about 20 member companies, which include the Industrial and Commercial Bank of China, China Construction Bank and Delong Steel, a unit of Singapore-listed Delong Holdings.

The Chicago exchange had 13 member firms when it began trading in 2003 and now hosts more than 400 members. Mr Huang declined to forecast future trading levels at the new exchange, pointing instead to the Chicago exchange’s history, where total trading volume surged to 110 million tonnes last year from only 2.2 million tonnes in 2003, he said.

The Tianjin exchange’s success could hinge on Beijing’s official support for environmental goals, something the Chicago exchange does not enjoy as the US is still not a party to the Kyoto Protocol.

“The current overall conditions in China for trading emissions are much better than in the United States when the Chicago exchange started up,” Mr Huang said.

Comments are closed.