Feb 21 2013
China may soon get its very own tax on carbon emissions. That’s the latest scuttlebutt from state-owned news service Xinhua, which noted that the levy would be part of a broader effort to improve the country’s environment.
Carbon tax, you say?
It’s easy to see why this move is attracting so much attention. China is the world’s largest emitter of greenhouse gases. Yet the country has earned a reputation for bogging down international efforts to tackle climate change. A carbon tax looks like a big about-face. And it’s more than anything Congress is proposing right now.
Still, the details matter a lot here. Some experts think China’s carbon tax may be too small and loophole-ridden to make much difference on emissions, at least in the beginning. On the other hand, a carbon tax also isn’t the only thing China is doing to try to rein in its pollution. So here are a few things to consider:
1) China’s carbon tax is likely to be small at first. Chinese officials have offered hints about the size of the tax. Back in 2011, its Finance Ministry proposed a levy that would start at 10 yuan ($1.60) per ton of carbon and rise to 50 yuan ($8) per ton by 2020. (The Environment Ministry has pushed for a tax worth about twice that.)
To put that in perspective, the proposal would initially add less than $1 to the price of a ton of coal, rising to about $4.40 by 2020. Coal in China currently trades for around $86.50 a ton. So it’s a modest first step.