EU Works on New Carbon Markets With China And South Korea

China's prime minister Li Keqiang and EU Commission president Jean-Claude Juncker meet in Beijing on 12 July 2016. Photo: EC
China's prime minister Li Keqiang and EU Commission president Jean-Claude Juncker meet in Beijing on 12 July 2016. Photo: EC

Carbon markets are popping up around the world, and now the European Union is promoting the carbon emissions-busting concept across Asia.

“I hope that China’s and (…) Korea’s experience can be a trigger to expand emissions trading systems across the region,” said Europe’s climate commissioner Arias Cañete about two of the EU’s latest projects.

The EU is investing €10 million to support China in setting up its own emissions trading system, which along with carbon tax is seen as one of the most cost-effective ways for governments to reduce greenhouse gas emissions.

The collaboration could also help ensure the potentially huge Chinese market will be compatible with systems in Europe and elsewhere – with an eye on possible future integration.

The European Commission says it will also establish a “regular dialogue” to discuss carbon market developments with the countries.

Paris Agreement

“Cooperation between the two largest emissions trading systems in the world will send a strong signal to other countries as they prepare to implement their Paris commitments,” Cañete said about the new project with China.

The European Commission has also launched a €3.5 million project to support South Korea’s new carbon market.

Despite some growing pains, the number of emissions trading systems around the world is increasing. Aside from the European Union’s carbon market, systems are now already operating or under development in Canada, China, Japan, New Zealand, South Korea, Switzerland and the United States.

Increasingly, efforts are being made to make sure international markets are compatible with each other, with some state and provincial governments in the US and Canada already linking up their systems.

First Major Carbon Market

The EU runs the world’s first major carbon market and remains the biggest one.

Europe’s carbon market covers almost half of EU greenhouse gas emissions, and is based on the ‘cap and trade’ principle. A limit is set on the total amount of greenhouse gases that can be emitted, and this ‘cap’ is reduced over time – resulting in a drop in emissions.

Meanwhile, companies receive or buy emission allowances – the total number of which cannot exceed the cap – which they can trade with other businesses as needed.

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