Climate change

Clearing up emissions trading

PUBLISHED : Sunday, 06 August, 2006, 12:00am
UPDATED : Sunday, 06 August, 2006, 12:00am

A five-minute primer on an issue making headlines

Hong Kong and Guangdong leaders last Wednesday announced the introduction of a pilot emissions trading scheme to address regional air pollution. Chief Executive Donald Tsang Yam-kuen says he is confident emissions of four major air pollutants can be cut by up to 55 per cent by 2010.

So, what does all this mean?

Power companies on both sides of the border will be able to buy, or be granted, emissions quotas - permission to emit a certain amount of pollution. Companies that don't use up their quotas can sell the remainder to other firms.

Does this mean clearer skies for Hong Kong anytime soon?

The scheme is not mandatory, and considering that Hong Kong's two main polluters, CLP Power and Hongkong Electric, are none too keen to sign up for the scheme, it doesn't seem likely we'll be able to spot The Peak from the harbour all year round for some time yet.

Who else uses schemes like this?

Currently, the only mandatory emissions trading scheme is run by the European Union, which issues permits to polluting companies. Britain and California signed a carbon trading deal last week.

Is this all part of the Kyoto Protocol?

Yes, it is. The Kyoto Protocol is an international treaty first negotiated in 1997 and designed to combat greenhouse gas emissions. It sets a mandatory cap on the quantity of greenhouse gases, such as carbon dioxide, that can be emitted by the 31 industrial countries to have ratified the treaty among the 164 that are signatories. The 31 countries must reduce their 1990-level greenhouse gas emissions by 5.2 per cent by 2012.

Is China a signatory?

Yes, it is, but as a developing nation, rather than a developed one, so it is not bound to the goals to restrain greenhouse gas emissions. America's also a signatory, but has refused to ratify the treaty.

How does this quota system reduce greenhouse gases?

The theory is that some companies may be able to effectively and cheaply reduce the emissions they spew into the air. If there's credit left on their permit, they can sell this to another company that has already reached the limit of its quota. The fewer the available credits, the more expensive they become. Thus heavy polluters will have to pay more.