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By Emma Graham-Harrison
Reuters – China’s first emissions exchange hopes to capitalise on the country’s pledges to shift towards cleaner growth, even in the absence of any government caps on production of pollutants, its chief executive told Reuters.
Richard Sandor, head of stakeholder the Chicago Climate Exchange (CCX), said the company is placing its early hopes on a strong track record of building markets and the Chinese government’s firm, if generalised, promises.
“It is our sense that there is a latent demand in China to deal with environmental issues,” Sandor told Reuters in a telephone interview from his Chicago base.
“We will proceed and operationalise whatever the wisdom of the PRC (People’s Republic of China) is, and we will develop voluntary markets as we sense that there is demand,” he added.
He declined to say how much will be invested in the new Tianjin Climate Exchange, or when it might start trading. The CCX itself is owned by UK-based Climate Exchange Plc .
A joint venture with a unit of top oil and gas firm CNPC and a property rights exchange that was unveiled earlier this year, it aims “to build the skills and institutions needed to cost-effectively manage emissions”, a brochure said.
Despite the “climate” in its name, Sandor focused answers to interview questions on government commitments, made in 2005, to cut acid rain causing sulphur dioxide and water pollutants while boosting energy efficiency.
“There are a thousand opportunities to help the Chinese have sustainable growth…we as a business model and certainly the United States as a country started with an acid rain programme,” he said, in answer to one inquiry about hopes for greenhouse gas emissions trading.
The country does not have any commitment to cap its output of greenhouse gases, which have equalled and probably topped those of former biggest polluter the United States.
Whether or not it will accept such targets is a focus of international climate change talks, but any goals would not come into force until 2012 at the earliest, when the current Kyoto Protocol targets expire.
The exchange will arrange auctions of carbon credits, the brochure said, although in a country with no emissions quotas and little of the environmental awareness that drives voluntary markets elsewhere, it was not clear who the buyers would be. Sandor declined to comment.
LONG TERM HOPES
China’s central bank revealed in June it had drawn up a tentative outline for a domestic emissions trading scheme that could cover everything from greenhouse gases to water pollutants.
It was the first sign that Beijing is seriously considering a comprehensive national strategy to force its companies to either control their pollution or pay for their excess, as it struggles to meet its own tough environmental goals.
Sandor believes there is room for his company to turn a profit even if Beijing moves slowly.
“We think that there is commercial logic. The CCX, even in the face of certainly no support from the U.S. federal government, has a baseline of 600 million tonnes worth 30 percent the size of Europe.”
He also shrugged off worries about verification and quality in a country that has been wrestling for years with quality issues ranging from lead paint on toys to tainted milk powder that this year killed four infants.
“I have an unambiguous faith in the ability of China to tackle problems and solve them unambiguously. We wouldn’t have been involved if we didn’t think the idea could be implemented successfully.” (Editing by Anthony Barker)
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