CLIMATE: China exchange will set voluntary GHG standard (09/23/2009 -- Environment & Energy PM)
NEW YORK -- China will establish a limited, domestic greenhouse gas offset credit as part of the experimental establishment of a voluntary carbon market, officials announced today.
The offset standard, which the China Beijing Environmental Exchange (CBEEX) is calling the "Panda Standard," will be limited to carbon abatement projects in agriculture, forestry and fisheries.
CBEEX officers and the head of Europe's giant BlueNext carbon allowance and offset exchange pitched the idea here in hopes of drawing interest from U.S. investors and firms interested in financing the pilot system or in secondary trading of the credits once they are created.
Organizers are also hoping that Chinese companies will jump on board, giving firms there a first taste of emissions trading.
Proponents of the voluntary carbon market in the United States often describe it as offering "pre-compliance" practice for companies that could eventually face a federal cap-and-trade system, but officials behind the Panda Standard took pains to make it clear that their foray into voluntary emissions offsetting in no way should be seen as a prelude to cap and trade in China.
The details have yet to be worked out, but CBEEX and BlueNext, both collaborating in what would become the first Chinese-only voluntary offset project verification standard, indicated the system would closely resemble the U.S. Voluntary Carbon Standard or the international Gold Standard and not the Chicago Climate Exchange, which is a membership-based system. That means trading will be open and there will be no established cap on emissions or requirements for meeting reduction targets for participating companies.
There will be "no cap limits, so we have to make it clear," said Mei Dewen, general manager of CBEEX, at a press conference at the New York Stock Exchange.
Mei described the Panda Standard as strictly a pilot project. The main purpose of new voluntary offset credit is to encourage greater corporate social responsibility in China and beyond and for environmental protection. The project is also being strictly limited to agriculture and forestry as a means of encouraging rural development, CBEEX officials said.
The Panda Standard's proponents could not give a date for when investors could expect the standard to be up and running and credits ready for trading. BlueNext officials did say that they hoped to have at least the standard itself finalized before the international climate negotiations scheduled for Copenhagen in December kick off.
It typically took anywhere from two to four years for voluntary carbon market players to develop the existing standards. But the CBEEX says it has no plans to start from scratch and will look at the work of the VCS, Gold Standard and California Climate Action Registry and other examples of carbon offset auditing and verification rules.
"Of course, this element will take a lot of time," BlueNext executive David Rapin said.
Though the Panda Standard is designed to be very limited in scope, excluding many of the heaviest greenhouse gas-emitting sectors in the Chinese economy, Panda Standard developers left open the possibility of opening the project to carbon abatement schemes in manufacturing and industry at some point in the future.