China Environmental Law

Plans to establish a market to trade carbon credits in Tianjin have been iced (h/t to Rich at All Roads).  An announcement earlier this year provided that

CNPC Assets Management Co., an affiliate of China National Petroleum Corp. (which is also the parent company of PetroChina), together with the Tianjin Property Rights Exchange and the Chicago Climate Exchange undertook to establish China’s first emissions trading exchange in Tianjin, in northern China. The Chicago Climate Exchange, which has been trading greenhouse gas emission allowances since 2003, was set to take a 25% stake in the 100 million yuan ($14.6 million) exchange, according to the agreement. CNPC Assets Management and Tianjin Property Rights Exchange would have 53% and 22% ownership, respectively.

Everything started to unravel, however, after the domestic partners became reluctant to let the Chicago Climate Exchange take a minority stake in the market. 

What exactly the market was going to trade was a little unclear in the press reports.  They generally stated (see, e.g., here) that the exchange “was designed to trade permits for emissions of greenhouse gases like carbon dioxide and sulfur dioxide, according to the newspaper.” 

Sulfur dioxide is not a greenhouse gas, and I find it a little unlikely that the proposed exchange would have engaged in SO2 trades, at least in the near term. There is not (to the best of my knowledge) an international market in SO2 credits, and China’s internal SO2 trading scheme is still in the planning stages with help from US EPA (as recently noted in the latest SED round fact sheet).

As for carbon dioxide, I assume this market was going to trade, in the words of the Chicago Climate Exchange ”voluntary legally binding” (i.e., non-Kyoto certified) carbon credits.  Plans for a market, to be based in Beijing, to trade (Kyoto certified) Clean Development Mechanism (CDM) generated credits are still apparently in the works, but they are running out of time if it was anticipated that China would supply most of the credits for this market since CDM produced credits are currently only legally valid through 2012.

Bottom line: don’t come to China if you like to buy your carbon credits on a market.