China will be launching a carbon emissions trading scheme (ETS) in December 2013. The scheme will be the second largest carbon market in the world after the European Union (EU) when fully operational. China intends to cut its carbon dioxide emissions per unit of GDP by up to 45 per cent by 2020, from 2005 levels. According to the local Development and Reform Commission, emissions from 202 companies in Guangdong will be capped at 350Mt for 2013. Guangdong province has a cement production capacity of 132.7Mt/yr, the second highest in the country after Anhui province.
However, Chinese ETS projects face transparency issues. If traders don’t know accurately how much carbon dioxide is being produced by industry, such as in cement production, then the scheme may be undermined. Similarly, over-allocating carbon permits may make it easier for producers to meet targets but will cause problems in the trading price of carbon. Experts welcomed the step as it can effectively cut overall emissions and clear the air in its smog-filled mega cities. Some experts though are concerned that the carbon prices may have been higher than expected due to market collusion. Large cement producers will be able to reap the best from the scheme, from having more carbon permits to sell, to rolling out unified emissions assessment protocols, to liaising better with scheme planners.