Emissions reduction challenging opportunity

Editor's note: Shanghai-based Wenhui Daily hosted a seminar earlier this month, inviting experts, including Li Jin, deputy general manager of the Shanghai Environment and Energy Exchange, and He Kebin, dean of the Institute for Carbon Neutrality at Tsinghua University, to share their insights on China's green transition. Below are excerpts of their presentations at the seminar's round table session, as reported by Wenhui Daily. The views don't necessarily represent those of China Daily.

As China has established the world's largest domestic carbon market, many emerging and developing countries that seek to develop their own carbon markets, such as in Southeast Asia and BRICS member states, are communicating with China to learn from its experience.

China is ready to share its expertise in designing carbon market mechanisms with other emerging economies. At last year's 30th Conference of the Parties to the United Nations Framework Convention on Climate Change at Belem in Brazil, China, together with the European Union and Brazil, launched the Open Coalition on Compliance Carbon Markets to share its experience.

Regarding the connectivity in the international carbon market, Articles 6.2 and 6.4 of the Paris Agreement make it clear that countries may transfer emissions reduction credits to assist each other in fulfilling their nationally determined contributions. Standards and infrastructure for the international trading of emissions reduction credits are gradually being developed.

Carbon mitigation presents both challenges and opportunities for countries. It is not only an obligation under global climate agreements but also an opportunity for transforming economies. A key topic in the discussion over the green transition is how countries can strike a balance between emissions cuts and economic growth.

Local governments in China face several pressures regarding emissions reduction requirements. First, China has a carbon-intensive energy mix, in which fossil fuels, particularly coal, account for a relatively large share.

Second, industry is a major contributor to China's GDP. China produces a large quantity of construction materials, petrochemicals and metallurgical products for the global market. Researchers are exploring consumption-based accounting for greenhouse gas emissions for these products, but the current international standard is production-based. This drives up China's emissions figures while it is still undergoing industrial transformation.

Third, China has maintained high economic growth rates. Aligning economic growth with emissions cuts is therefore a challenge.

Fourth, unlike Europe and the United States, which have traveled on "a gentle slope" to reduce carbon emissions, China faces a "steep slope" because it has a tight timeline for achieving carbon peaking before 2030 and carbon neutrality before 2060.

Technological advancement and breakthroughs are crucial to addressing these challenges.

Shanghai plans to roll out measures for evaluating the "green performance" of companies, including energy consumption, carbon emissions and pollutant discharge. Enterprises will make self-declarations for evaluation and the results will influence the granting of green credit and financial guarantees. The city is also working to allow enterprises that use carbon as collateral to enjoy interest subsidies on loans. This will encourage enterprises to utilize carbon financial tools and engage more effectively in green financing.