China to launch the world’s largest cap and trade program

WASHINGTON—The speculation surrounding Xi Jinping’s plan to announce a major climate policy shift when he visited Washington last week did not disappoint. In a joint statement issued with the U.S., China’s president said the country will launch the world’s largest cap and trade system in 2017.

The program will incorporate a national emissions trading system covering power generation, steel, cement, and other key industrial sectors, as well as implement a “green dispatch” system to favor low-carbon sources in the electric grid. The announcement follows a range of climate initiatives undertaken in the the U.S. under the Clean Power Plan. Most significantly, the U.S. has committed to reducing its emissions in the power sector by 32 per cent by 2030.

The United Nations was quick to applaud the announcement.

“China’s plans to create the world’s largest carbon market by 2017, coupled with its ground-breaking commitment of $3 billion to South-South cooperation on climate change, will improve the health and well-being of its citizens and deliver tangible benefits to the world’s poorest and most vulnerable people,” a spokesperson for UN Secretary-General Ban Ki-moon, said.

Both countries are also developing new heavy vehicle fuel efficiency standards that will be implemented in 2016 and 2019.

The joint statement also highlighted how the U.S. and China plan to work together with a “common vision” at this year’s climate talks in Paris, adding to the anticipation that world governments may finally take strong action to fight climate change.

“As part of their commitment to a successful and ambitious Paris outcome, the two countries articulated a set of shared understandings for the agreement, including on the importance of a successful agreement that ramps-up ambition over time, pointing toward a low-carbon transformation of the global economy this century,” the White House said.