China announces plan to reduce carbon emissions

SHANE MCLEOD: One of the key arguments that the Coalition has used against the Government's carbon pricing plan has been that Australia shouldn't move ahead of other countries.

The argument goes that while countries like China are not doing it neither should Australia.

Europe, New Zealand and even some states in the US have set up carbon trading schemes and Beijing has now released details of its own plans. And our China correspondent Stephen McDonell joins me from Beijing to explain how it will work.

So Stephen exactly where is China at with this proposed scheme?

STEPHEN MCDONELL: Well what China is going to do is to set up a pilot carbon emissions trading project and that this will according to the government gradually become a carbon emissions trading market across the whole country.

Now the details of this have come from Xie Zhenhua who is the vice-minister in charge of the National Development and Reform Commission. And that's like the big economic ministry here. It's like coming from Treasury actually.

And this is who is going to be setting the levels in this pilot scheme. And at the moment they've started off, they're going to start off with just five provinces - Guangdong, Liaoning, Hubei, Shaanxi and Yunnan.

But significantly for Guangdong which is the world's factory really, this is the big sort of driver of China's economy, it is going to have a target of reducing emissions per unit of GDP by 30 per cent by 2015 compared to the level of 2005.

SHANE MCLEOD: So Stephen is it emissions trading or is there something like a carbon tax in this new trading system?

STEPHEN MCDONELL: Well it's interesting. It does actually look like there is something amounting to a carbon tax in this system because Xie Zhenhua spoke about the government's determination to implement punitive electricity tariffs which are going to reduce carbon emissions in the most polluting industries. That looks like pretty much the same thing as what Australia is doing really.

SHANE MCLEOD: But is this actually going to do anything substantial towards reducing China's carbon emissions?

STEPHEN MCDONELL: Well the thing that China speaks about is carbon intensity. And this is a little bit complicated but it's, basically it's CO2 emissions per unit of GDP.

So the idea is that the economy can keep growing but as long as the amount of carbon as a proportion of the GDP keeps reducing.

And the significant commitment from president Hu Jintao in fact has been to - and I'll give you the exact figure.

This came out through the state council which is basically the ministry in China, that China is going to reduce its intensity of carbon dioxide emissions per unit of GDP by the year 2020 to a huge 40 or 45 per cent compared to the level of 2005. So that is a substantial reduction.

Of course the counter argument would be that because China's economy is going to keep growing it will keep emitting carbon. But as a proportion of GDP it's going to be well almost halved.

SHANE MCLEOD: And so, what the intention is that you'd get more efficiency out of the intensive industries and then the low carbon industries would take up the slack?

STEPHEN MCDONELL: Yes exactly. And not only that.

In Australia some of the most carbon intensive industries, they've seen the writing on the wall and they are themselves pouring billions of dollars into renewable energy.

So some of the most massive wind farms and solar power projects and that sort of thing, they are being funded by the oil companies and by traditional coal-fired power companies here. They don't see that as a contradiction.

And so yes, it is pretty much the same principle that you tax people who are emitting more carbon and you encourage the more so-called clean energies.

SHANE MCLEOD: Our China correspondent Stephen McDonell joining us from Beijing.