Trading Places: China Looks to Cap-and-Trade, While the U.S. Rides the Bench

Last Updated Nov 18, 2010 5:54 PM EST

China and the U.S. have traded places, at least when it comes to interest in pursuing a cap-and-trade system aimed at cutting greenhouse gas emissions. China is reportedly studying a cap-and-trade system, while the U.S. Senate has killed the prospect of climate change legislation making it onto the congressional agenda. It's an upside-down world only Major Major Major Major could understand.

The move by China isn't entirely surprising. The country's investment in clean energy is well known -- even leading G-20 nations -- and in recent months it has outlined plans to curb coal-powered plant capacity. China has previously set a goal to cut emission by up to 45 percent by 2020 from 2005 levels.

And while "studying" cap-and-trade doesn't mean implementing it, China has still come along way from those heady climate talk days last year. Lest we forget how much has changed, here's a quick history lesson: During last year's global climate talks in Copenhagen, China, Saudi Arabia and India blocked a motion to consider a legally binding new protocol that would have mandated emissions reductions. China, the world's largest greenhouse gas emitter, and other developing nations typically use the "it's our turn to industrialize" argument, even calling on rich nations to help pay for its emissions reductions. Meanwhile in the U.S., the House had passed climate change legislation that included cap-and-trade provisions.

All of the momentum towards cap-and-trade legislation in U.S. has since ended and the Chicago Climate Exchange, the country's emissions trading scheme, is closing as a result.

So, why is China's interested in cap-and-trade mean? It's economic and goes back to the same reason China has been adding solar and wind power capacity. China's energy demands -- including its heavy reliance on cheap coal for electricity -- have helped make it the largest polluter in the world. And while China has been scrambling to secure fossil fuel resources, it's also trying to find other ways to meet this rising demand.

Adding renewable energy capacity is one option. Another is to introduce a system -- like cap-and-trade -- that encourages large companies including big industrial facilities to increase efficiency and even switch from fossil fuels to cleaner, home-produced source.

Photo from Flickr user peruisay, CC 2.0
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