Chinese Guangdong provincial government centralises power in local ETS

20 January 2014 18:33 Source:ICIS

The Chinese Guangdong prefectural governments have lost power in the local emission trading system (ETS) to their provincial equivalent, according to the trial carbon emission measures issued on Monday.

China has five levels of local government from province down through prefecture, county, township and finally to village. The provincial and prefectural levels gain most power and usually fight hard with each other in the local power struggle.

In the case of Guangdong, it has one provincial government and 21 prefectural administrations.

The trial measures draw a fine line between the two parties. The prefectural governments only enjoy the power of reporting and verifying carbon emissions from the local compliance companies, whereas the provincial administration gains the main power such as allocating and auctioning allowances.

“We don’t want prefectural governments to intercede with their local covered entities which are the major employers and taxpayers, if those companies fail to fulfil the compliance requirements by this June,” said a Guangdong official, one of the architects of the new measures.

The Guangdong ETS is the first Chinese carbon trading pilot to distribute power between the provincial and prefectural governments.

Other highlights of the new measures include expanding the Guangdong ETS to cover CO2 from the local public transportation sector, encouraging more forest carbon sink programs, and establishing a cross-region carbon market.

The Guangdong pilot demands that twice the unfulfilled allowance amounts are deducted from the following year’s permit allocation, with the maximum penalty of yuan 50,000 (€6,094) - five times that of the Shanghai platform.

“The harsh measure shows the local ETS is in the hands of the provincial government,” said Chen Bo, the director associate of the climate and energy finance research centre in the Central University of Finance and Economics. Ling Ma

By Ling Ma