http://www.washingtonpost.com/business/economy/china-to-adopt-cap-and-trade-system-to-limit-carbon-emmissions/2015/09/24/eece656c-62f9-11e5-9757-e49273f05f65_story.html

China to adopt cap and trade system to limit carbon emissions

By Steven Mufson

September 24, 2015

Chinese President Xi Jinping on Friday will announce a nationwide cap-and-trade program to curtail carbon emissions, adopting a mechanism most widely used in Europe to limit greenhouse gases, Obama administration officials said.

Expanding on a pilot project in seven Chinese cities, the cap-and-trade program will impose a nationwide ceiling on emissions from the most carbon-intensive sectors of the Chinese economy and require companies exceeding their quotas to buy permits from those that have sharply reduced emissions.

Xi will make the announcement in Washington in a joint statement with President Obama, who has been pressing world leaders to take ambitious steps to slow climate change and submit detailed plans in advance of a Paris climate conference in December.

The announcement could provide a bright spot to a summit darkened with disagreements over China's cyberattacks on U.S. companies, its more restrictive proposed law on nongovernmental organizations, continuing human rights differences, and the apparent construction in progress of four fighter jet runways on disputed islands and reefs in the South China Sea.

It also spells out the actions China will take to meet the target Xi set last November during Obama's visit to Beijing.

China is the world's biggest emitting nation, accounting for nearly 30 percent of greenhouse gas emissions. The government has already pledged that by 2020 it will reduce by 40 to 45 percent the amount of carbon produced for every unit of gross domestic product and will reach a peak emission level by 2030.

How much the new cap-and-trade program alters that path will depend on the level of the nationwide cap. But it will apply to China's power generation sector, iron and steel industries, chemical firms, and makers of building materials, cement and paper.

"Together they produce a substantial amount of China's climate pollution," said a senior administration official. "It is a significant move."

It also addresses an issue for ordinary Chinese, who have been angered by conventional air pollution that has obscured skylines and triggered widespread respiratory illnesses, as well as hundreds of thousands of premature deaths.

China on Friday will also pledge to aid low-income nations in a financial commitment similar to the $3 billion the Obama administration has already asked Congress to appropriate in fiscal 2016 for the international Green Climate Fund. Obama will reaffirm his commitment to making that contribution and to already-announced plans for limiting emissions through regulations for heavy vehicles and the Clean Power Plan for utilities.

The joint statement on Friday will also include language reinforcing the end of an approach dating to 1992 that divided the world into developed countries that needed to take climate measures and less-developed ones that did not. The language will acknowledge different circumstances but require all countries to combat climate change.

There are many ironies in the Chinese announcement. The cap-and-trade program was first advocated in the United States but first adopted in Europe. In Obama's first year in office in 2009, the House passed a cap-and-trade measure, but it died in the Senate.

Some U.S. states have tried their own limited cap-and-trade programs, including California and a group of Northeast states.

Li Shuo, Greenpeace's senior climate and energy policy adviser for East Asia, said that the climate accords last November, when China set ambitious targets, now bind the two countries together when the political horizon is hazy.

"If there is a Republican president, you will have an interesting dynamic," Li said. "Can he or she walk away from an agreement without worrying about the consequences if there is a commitment made by the presidents of the two countries? An aspect of this is the politics: binding these two countries together."