China's rapid economic expansion has been fuelled by a huge capacity of energy generation, mostly in the form of coal power plants, which has turned the country into the largest producer of carbon emissions in the world.
The country's official policy has always been that efforts to battle climate change should be headed by the developed nations who have already been allowed to emit huge amounts of carbon dioxide in order to fuel their economic expansion, rather than the current largest emitters. However a new report compiled by Beijing's Central University of Finance and Economics offered a contrasting view, stating that China must take responsibility for its share of carbon emissions and spend 2 trillion yuan ($330 billion) on emission cuts and clean technologies.
Chen Bo, the co-author of the report, explained that China has already pledged to spend 520 billion yuan ($86 billion) in order to help keep the average global temperature rise below the 2°C that scientists have identified as the limit to avoid catastrophic climate change. Unfortunately this is only a fifth of the amount actually needed to be spent in order for China to shoulder a burden proportionate to its contribution to the problem.
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The report said that the government must do more to battle climate change and carbon emissions in order to set an example to the private industry. "Public funding is essential to address climate change problems, and without a clear signal on CO2 emissions, mitigation projects are not financially attractive to investors."
It suggests that the government should use carbon markets to auction CO2 permits in order to raise the cash to fund the necessary investments. Reuters claims that over the past seven months, five regional trading schemes have been created around China with plans to introduce a scheme for the national market some time during before 2020. One of the markets, southern Guangdong, is currently auctioning 29 million permits a year to firms, although the revenue generated is not reserved for investing in climate change.
The report has been submitted to the State Council, China's ruling cabinet, and suggests that the China Development Bank should create a Green Investment Department in order to stimulate private and public investment in climate related projects.
By. Charles Kennedy of Oilprice.com
Charles is a writer for Oilprice.com More