The Abacus

China's New Emission Trading Scheme


ACBC’s National Sponsor Rio Tinto features in an Australian Financial Review article today about the global implications of China’s move away from coal.

Following moves by South Korea and India to price carbon, China will introduce an Emissions Trading Scheme (ETS) by the end of 2017.  It will be twice the size of Europe’s scheme and accompanied by a new national environmental levy on big polluters.  Ross Garnaut, who is quoted in the article, believes China’s coal use peaked in 2013 (the following year the Abbott Government ended Australia’s carbon pricing mechanism).

Rio Tinto is now virtually out of thermal coal.  Head of environment and climate change, Matthew Bateson, said:  ‘The world is generally moving away from coal and if we are going to limit global temperature rises to 2 degrees, as governments committed to in Paris, then government policy action will have to accelerate beyond 2030.’

At ACBC’s Australia China Economic and Trade Cooperation Forum in March this year we heard a number of views about the future of Australian commodities trade with China.  Wu Daohuong of the Chinese energy technology company Shenwu emphasised China’s need for new ways of dealing with air pollution and solid waste.  Given Australia’s abundance of natural resources, he said, there is potential for new partnerships in clean coal technology, and in developing new ways that coal can be concentrated to make transporting it cheaper and easier.

Jean-Sebastien Jacques, CEO of Rio Tinto, expressed confidence in the commodities relationship even in the context of China’s shift away from coal and towards consumption-led growth.  He predicted that there would, however, be a shift in the commodities relationship from volume to value.  The demand will be for higher quality resources, and the winners in this environment will be those who can offer additional value.

The AFR article can be found here (paywall). 


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