Tag Archives: CO2 markets

Natural Resources Markets in China: upcoming

fish ponds near Daye, Hubei, China, Image from wikipedia

A nationwide  carbon-trading scheme, to be set up in 2017, is the most visible example of a broader trend in China towards using market mechanisms in environmental matters…[A] reform plan issued by the government on September 21st, 2015  laying out the basis of future policy, talks about developing “a market system which allows economic levers to play a greater role in environmental governance”. If the plan is to be believed, China will go further than any other country in developing environmental market mechanisms.

The plan talks of selling “green” bonds, ie, those financing projects certified as environmentally sound. The government will improve financial guarantees for low-carbon projects. But those are becoming common. More fundamentally, the reform says China will separate the ownership of all natural resources from the rights to use them—and sell the usage rights at market.

This is much more radical. The idea is rooted in communist dogma, which says all natural resources—land, rivers, minerals and so on—are collectively owned. The reform plan begins by calling for a massive Domesday-like inventory of who owns what, whether central government, provincial governments or lower tiers. It then says, with utter insouciance, that “with the exception of natural resources which are ecologically important [eg, national parks], the ownership rights and use rights for all other natural resources can be separated”. And, having separated them, the usage rights can be bought and sold, rented out, used as collateral or as the basis of loan guarantees, and so on.  

The carbon-trading scheme suggests what this could mean in practice. It is like a market in energy-usage rights, with the carbon treated as part of the cost of using fossil fuels. A market in water rights will also be set up. Trials will be held in Gansu and Ningxia, two north-western provinces. The plan talks cryptically of setting up a “natural resource asset exchange”.

Excerpts from Markets and the environment: Domesday scenario, Economist, Oct. 3, 2015, at 46

Climate Markets for Forests, growing

Press Release on  The State of the Forest Carbon Markets 2011: From Canopy to Currency (2011). (PDF) This is Ecosystem Marketplace’s second annual report giving readers an in-depth look at what’s happening in today’s market, and what might be happening down the road.    First, 2010 marked a dramatic increase in the volume and value of credits, dramatically outpacing the market activity we observed in our last State of the Forest Carbon Markets report that covered transactions up to mid-2009. The 2010 surge in credit generation has been fueled to a great extent by large Reduced Emissions from Deforestation and Forest Degradation (REDD) projects.

The increasing entry of the private sector as project developers, investors, and buyers is also bringing new blood into the market and may hold a host of new implications for the future of the forest carbon markets as well as their perception in the broader climate policy discourse. From a rising secondary market to a strong boost in volumes due to forward contracting brought about in no small part by newly minted forest carbon methodologies, this report uncovers a host of interesting developments.   Project developers and market players looking into the future were optimistic about market growth, but few predicted the market would reach its current size and even fewer seemed to sense the scale of credits now being developed by hundreds of projects in the pipeline