PBOC governor backs carbon trading

A move by Beijing to use financial incentives to deliver pollution cuts could see the introduction of a system of carbon emissions quotas and a carbon-trading exchange, the South China Morning Post reported. Writing in a magazine supervised by the State Environmental Protection Agency (SEPA), central bank governor Zhou Xiaochuan said China had much to learn from international carbon-trading mechanisms. He also suggested a degree of price liberation for commodities such as coal, oil products, natural gas, water and electricity. The government maintains prices at lower than market value in order to ensure social stability. Critics argue that this merely encourages waste. It is thought that a cap-and-trade system, under which enterprises buy and sell carbon credits to meet individual emissions quotas, is still a long way off. On Monday, SEPA published the first group of 30 enterprises blacklisted under the "green credit" initiative, which bans banks from making loans to firms that fail to meet environmental standards.