Chinese Carbon Trading Standards Now Available      

China has announced plans to cut carbon intensity, or carbon emission per unit GDP, by 40%-45% below 2005 levels by 2020. Institutions seeking to set up standards for the carbon trading business have smelled some business opportunities.
    Beijing Environment Exchange unveiled its "Panda Standard" on December 17th, 2009 at the Copenhagen climate summit, which is so far the only carbon trading standard by China.
   Carbon intensity will be China's fourth specification for controlling pollutants emissions, adding to its goals in sulfur dioxide emission, water pollutants emission and energy efficiency per GDP during the 11th Five-Year Program (2006-2010). "Now the key challenge is how to create a mechanism and standards that could help the nation to realize these goals," said an executive at the Beijing exchange.
   Market insiders said that the main players in the domestic carbon trading market will be domestic companies, as the market will adopt China's own technologies and standards, trading rules and trading formulas. Once the market is established, it will end the situation that China could only be a provider of basic commodities in the first-level market.
   The "Panda Standard" is first to determine the range of transactions and trading scale, and then provide methodologies, including various industry standards, and the rules to select review and testing agencies. Finally, it will make clear the rights and obligations for brokers and investors in emission reduction, according to sources from the Beijing Environment Exchange.
   The Beijing Environment Exchange has advantage in trading platform establishment but it also faces fierce competition in the methodologies front, especially that for the detection of carbon content, from many professional agencies including China National Institute of Standardization, the State Bureau of Quality and Technical Supervision and the Ministry of Environmental Protection. The National Development and Reform Commission has already detected the carbon content of 11 goods in supermarkets in a program sponsored by the World Wide Fund for Nature.
   Domestic players will be the end users of these standards. Sinopec Group and China National Petroleum Corp. have both worked out their own carbon footprint calculation formula, but only for internal research use. More Chinese companies should spend more efforts in this aspect.