EU and China team up on emissions trading

China’s pilot emissions trading system in a €25 million finance agreement with the European Commission.

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The European Commission and China have today (20 September) signed a €25 million financing agreement for the EU to provide expertise and assistance in setting up China’s pilot emissions trading system, along with other environmental goals.  

The agreement, signed in the margins of the EU-China summit taking place today, will see the EU participate in the development of China’s emissions trading system. The EU will also assist Chinese cities in adopting energy solutions and make resource use more efficient. Further cooperation will be taken in projects to reduce water and heavy metal pollution and to implement sustainable waste treatment.  

The cooperation comes as the EU and China are locked in a diplomatic battle over the EU’s decision to include foreign airlines in its own Emissions Trading Scheme (ETS). The EU is encouraging other countries to include aviation in their own emissions trading system or for a global market mechanism to be developed at the International Civil Aviation Organisation (ICAO).  

Last month Australia and the EU signed an agreement to link their emissions trading systems to create the first intercontinental scheme. Australia’s ETS was launched 1 July. China’s ETS is only in a pilot phase, so any linkage with the EU ETS would be a long way off.  

“Today’s agreement is an important step for an ever closer co-operation towards a robust international carbon market,” said Connie Hedegaard, European Commissioner for climate action, after the signing. “Needless to say that it makes a significant difference when now also China wants to use carbon markets to reduce emissions cost-effectively and boost low-carbon technologies.”