China losing out in low-carbon economy bonanza

China might be the world’s biggest generator of carbon credits, but its sclerotic financial sector is still holding the market back, the head of the country’s pioneering CO2 exchange said.

Carbon offsets are a brand-new commodity and China’s clean energy sector has generated more than half of the total credits now being sold under a United Nations-backed trading scheme.
China now admits to being the world’s biggest CO2 emitter and says it will do its utmost to establish a “low-carbon economy,” but its failure to set up a “low-carbon financing system” to go alongside it has proven costly, making it dependent on foreign traders and developers, he said.

The United Nations’ clean development mechanism (CDM) allows industrialised countries to invest in projects in the developing world in exchange for “certified emission reductions” that can be traded or used to meet CO2 targets set out by the Kyoto Protocol.

The Chinese CDM sector is strongly regulated by the state, and the country’s exchanges, brokerages and project developers are not yet permitted to buy or sell CERs on the local market.

Reuters