It is almost a year since the hopes pinned on the 15th UN climate conference in Copenhagen were dramatically dashed.
At Copenhagen, world leaders failed to agree a binding successor to the Kyoto Protocol. Kyoto came into force in 2005 and introduced a “cap and trade” system of carbon trading.
In November this year, with none of the hype of Copenhagen, the next meeting of the United Nations Framework Convention on Climate Change (UNFCCC) will be convened in Cancun, Mexico.
Why should we care? Because China is the world’s largest emitter of greenhouse gases. Because China’s future development and global warming are two of the most important factors shaping the future of planet Earth. And because the first commitment period of the Kyoto Protocol expires in 2012.
Chinese companies, and foreign enterprises in China, should also care. Chinese companies have made money trading carbon under the Kyoto arrangements, accounting for two-thirds of the world’s certified emissions reductions (i.e. Kyoto carbon credits). Whatever replaces Kyoto could have a major impact on the amount of money that companies can make, and the amount they have to pay.
In After Kyoto, we investigate the future of carbon trading after 2012, and the options being examined in China. Two things appear to be under consideration: a domestic cap-and-trade system with Chinese characteristics, and a carbon tax.
Lawyers voice caution. The notion of an environmental or carbon tax is described by one lawyer as “vague”, and any domestic cap-and-trade system looks likely to be tested at a local level before being introduced nationwide. But whatever the detail, the National Development and Reform Commission has announced that China will launch its own carbon trading system during the next five year plan (2011-2015).
Since our first issue, which went to press as world leaders met in Copenhagen, China Business Law Journal has consistently covered the issues surrounding environmental law and climate change.
