China hopes to learn from Europe’s carbon-trading blunders

Price control mechanisms and tightly regulated markets are among the measures China is considering for its emissions trading schemes in a bid to avoid the price volatility and scandals that have hit Europe's USD148-billion scheme, Reuters Point Carbon reported Friday.

As seven cities and provinces in China are preparing to launch the country's first emissions trading schemes to halt the nation's spiraling greenhouse gas emissions, the international carbon market is reeling from a huge over-supply and record low prices.

European permits have lost 80 percent of their value since mid-2008 and 50 percent in the last twelve months, spurring claims that the carbon market is becoming irrelevant in the EU's efforts to cut emissions.

"China will consider introducing both a price ceiling and a price floor to prevent the dramatic price fluctuation seen in the EU ETS," Chen Jianpeng of  the State Council's Development Research Centre, which is involved in studying the impact of a future Chinese ETS, told Reuters Point Carbon.

China, which accounts for almost a third of global CO2 emissions, plans to use the experiences from its pilot schemes to set up a national CO2 market later this decade.

The Beijing municipal government, which will host one of China's seven pilot schemes from 2013 or 2014, plans to implement a price floor and ceiling in the capital's CO2 market.

Emissions trading will take place on government-approved exchanges, and recently announced regulations by the State Council means only spot trading with a five-day delay on delivery will be allowed.