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One Way China is Getting Serious About Climate Change

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Beijing at sunrise.

One catch-22 of climate change has always been that it’s a global problem that must be addressed locally. Global governments won’t agree on action until individual nations have a plan. And individual nations are reluctant to make a plan until the rest of world takes the plunge too. The reason for this stems from the fact that some nations are much bigger polluters than others, which makes the cost on cutting back disproportionally large.

But China, the world’s top emitter of greenhouse gasses, has a plan to use climate change to its economic advantage—and its plan is very, well, American.

China is working on establishing a small-scale cap and trade program that will let the open market scale back greenhouse gas emissions. This will, in the process, allow some savvy innovators to make lots of money. The idea behind cap and trade was originated in the U.S. back in the 90s and worked swimmingly to deal with acid rain. But as Dirk Forrister and Paul Bledsoe pointed out this weekend in the New York Times, the U.S. took a “policy detour” away from the strategy when it was redefined to suggest it would make people’s energy bills rise.

China’s cap and trade program launched earlier this summer in the southern city of Shenzhen. The government will set a limit for emissions and any polluters who don’t reach their limits can sell remaining credits for a market price. The pollution limits will go down over time and the going rate for a credit (for anyone who exceeds the legal polluting limit) will go up, encouraging all polluters to reduce their emissions or pay through the nose to keep polluting.

If it works in Shenzhen, there’s reason to believe China could create a national system in the next few years. China is the world’s biggest emitter, each year putting 7,711 million tons of carbon dioxide into the atmosphere, according to the Energy Information Administration. That’s a big number. But unlike in the U.S. (the world’s second-biggest emitter) ,where climate change is often viewed as an economic drag, Chinese officials are beginning to understand its potential to make their economy grow in new ways.