China has agreed to work with the EU to create its own carbon trading system. This will create a large pool of funding for sustainable development.
The tide is changing. In a huge move for the global effort to reduce carbon emissions, China has announced that it is starting its own emissions trading system. And it is doing so with the help of the EU, with the long-term aim of the two carbon markets working together.
This means that the world’s largest overall emitter of carbon emissions will be doing its all to develop in a more sustainable manner. By linking emissions to a market, Chinese industry will have a monetary incentive to reduce emissions. And for companies that do not meet their targets, this means they can buy credits and pour money into the developing world.
To date the European Emissions Trading Scheme has been the only system with any impact. It also happens to be the one positive outcome of the Kyoto Protocol. The idea is that each country in Europe gets a cap on how many carbon emissions it can have. This is then divided between all the industries in the country. And if a company comes in under its cap, it can sell the difference. The unit for this is the Certified Emission Reduction.
If a company exceeds its targets, it can buy some of these units on the market. The hope is that the money will go into developing countries, who will develop in a sustainable way because they know there is money out there to help them.
And so far this has been the only way in which the ‘rich world’ has paid to help the developing world – one of the central ideals of the first Rio conference. But with only Europe doing its bit, the effect has been minimal.
When Europe did try expand its emissions programme to include airlines that were flying into the continent, the world went mad.
This frenzied opposition has been the norm in all global efforts to reduce carbon emissions. And the main opposition has been China and the United States – who kindly do all the world's emitting on everyone else's behalf. They have consistently refused to take the first step, staring each other down in a blinking contest where the only loser to date has been every single human being.
The developing world, including China, says the West should pay so they can develop in a sustainable way. This is because the West's growth came on the back of a dirty industrial revolution that left the world totally dependent on fossil fuels.
But the West is bankrupt, and is just a little bit jealous of the phenomenal growth in its ex-colonies. So it has dragged its heels on any decisions to help finance sustainable growth in the developing world. And while the Green Fund – the first concrete step in this direction – has been endorsed by the UN, it has no money and no headquarters.
Which means that for the near future, carbon trading is the only way to get money flowing into sustainable development. This is why China's decision to join up is stupendous, revolutionary and will quite possibly slow down our doom.
They have blinked and taken away all legitimacy from the United States. Uncle Sam has to big up and follow suit, or admit what we all know – that very little will happen when those who run things still do not believe that human activity is driving climate change.
The first step in the Chinese programme will be with the help of Europe, which is giving €25-million to three carbon-reduction programmes. As the learning curve is surfed, the investment into sustainable technology and development will be profound.
A comment on one blog, welcoming the news, said it succinctly: "That’s just a taster of what a world where the US doesn't lead will look like."