China and Europe Unveil Massive Plans to Fight Climate Change
Wednesday was quite the “Green Day,” but it had little to do with the Grammy-winning pop-punk band.
China announced it is launching the world’s biggest carbon market, with trading kicking off Friday. At the same time, the European Commission unveiled a plan of 13 rigorous new climate policies, including an expansion of pollution taxes on companies. Too bad there’s no Grammy Award for Most Eco-Friendly Policy.
Full of Hot Air
China, the world’s largest carbon emitter, views a carbon market as critical to reaching net-zero emissions by 2060. Its new program will double the total global emissions covered under carbon markets, which incentivize greenhouse gas reductions by permitting companies to buy and trade emissions credits:
- China’s carbon market will initially involve 2,225 power companies that together account for one-seventh of the world’s fossil-fuel combustion emissions, according to the International Energy Agency.
- Chinese officials said the average price per metric ton of CO2 emissions will be between $6.18 and $7.73 — comparable to some U.S. carbon trading, but far cheaper than the $59 to $70 price tag in the EU or the $55 to $69 seen in the U.K.
Green Plan, Red Light
Unlike China’s expedient rollout, the EU’s plan, which has a net-zero target date of 2050, faces months of extended negotiations and potential pushback from industry and financially weaker member states:
- The plan proposes a border tariff, forcing importers of steel, cement, aluminum, and fertilizer to pay a premium to dispatch their goods in Europe. The notion has already flustered some Russian firms.
- Automakers are also in the crosshairs — under the EU’s plan, new cars will face strict CO2 standards, with new gas-powered autos effectively banned by 2035. Other features include a tax on aviation fuel, requirements that countries renovate buildings not deemed energy-efficient, and yet-to-be-determined efforts to boost renewable funding.
“We’re going to ask a lot of our citizens,” said EU climate policy chief Frans Timmermans, acknowledging that price increases will hit heating bills and airline travel.
Good News, Bad News: The private sector made some green news of its own Wednesday. On the plus side, venture capitalists are on track to complete a record $7.7 billion in U.S. clean-tech deals this year, according to Pitchbook. On the downside, Generation Investment Management — a climate investment firm chaired by Al Gore — released new data showing 42% of corporate environmental claims are “exaggerated, false or deceptive.”