China will start trading in CO2 rights on Friday. From that moment on, more than 2200 companies in the energy sector will be given the right to emit a limited amount of CO2.
If they need more, they can buy those rights from companies that don’t need all of their rights. There is already a similar system in the European Union.
The price for the right to emit one tonne of CO2 opened on Friday at 48 yuan renminbi or 6.29 euros. However, it soon rose by the maximum permitted 10 percent per day. This means that the price is still far below Europe. At the beginning of this month, a tonne of CO2 reached its highest price ever of EUR 58.64.
The Chinese system has therefore been criticized for having received too many emission rights. However, experts claim that this award ensures that companies can get used to the system and to the idea of working more economically and cleaner.
China plans to soon make emissions trading compulsory for other sectors, which is likely to affect cement, steel and aluminium producers. These companies are among the biggest polluters.
Chinese President Xi Jinping wants his country’s emissions to peak in 2030 and for China to be carbon neutral by 2060.