China announces carbon trading and more aggressive emission targets for peak emissions by 2025 will mean more nuclear and hydro power

China is rolling out a carbon trading scheme and plans to place caps on emissions starting in 2016 and an overall peak in emissions by 2025. This plan to reach a peak in emissions in 2025 is 5 years earlier than previous objectives in 2012.

A new carbon trading scheme will cover 638 companies responsible for 38% of the city’s total emissions, the Shenzhen branch of the powerful National Development and Reform Commission (NDRC) announced on Wednesday. The scheme will eventually expand to include transportation, manufacturing and construction companies.

Shenzhen is one of seven designated areas in which the central government plans to roll out experimental carbon trading programmes before 2014.

* The carbon trading and caps will mean more financial support for nuclear energy and hydro power in China.
* The financial incentives could boost the amount of nuclear power that gets built.
* It will also mean more cleaner and bigger and newer coal plants and natural gas and renewables.

Emissions Trading Benefits Hydro, Nuclear, Renewables and probably Natural Gas

On the low‐CO2 generation side: hydro plants and nuclear plants then enjoy a higher financial return on their generation. For renewables that get revenues from the electricity market and a premium from the government, revenues are automatically increased as well. Consumers carry the full cost of CO2, including the additional profits provided to carbon‐free sources. In time, these carbon‐free sources have an incentive to expand, while fossil‐based generators are impacted by the CO2 cost.

The NDRC has discussed implementing a national system to control the intensity and volume of carbon emissions by 2020. The agency expects China to reach its carbon emissions peak by 2025, five years earlier than many recent estimates,

This could end up being closer to the low carbon or enhanced low carbon proposal of the Energy Research Institute.

Emissions trading also means less operation of dirty smaller coal plants and more for more efficient plants.

At the level of typical individual fossil‐fuel plants(switching generation from low‐efficiency coal to ultra‐super‐critical and gas plants).

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