China Promises Cap-and-Trade Emissions System

China’s President Xi Jinping reiterated his nation’s commitment to a cap-and-trade system for greenhouse gas emissions during his visit to the United States at the end of September. The quota system is designed to encourage individual industries to innovate in order to produce their own reduction in emissions. Those that succeed can sell their remaining quota, and those that fail to reduce emissions will have to buy a higher cap.

There are many obstacles to expanding the system nationwide in China by 2017, as few industries at present know what levels of emissions they are producing, but Xi’s official stance indicates a serious push within the central government to achieve results. If China is successful, this will make the country a world leader in reducing emissions, and its quota system will be the world’s largest carbon market.

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