Zhou Xiaochuan: The development of China's carbon market still needs to solve these problems

Recently, Zhou Xiaochuan, co-chairman of the IFF conference, former vice chairman of the National Committee of the Chinese People's Political Consultative Conference and former governor of the People's Bank of China, said at the sub-forum "Responding to Global Climate Change: Rules and Incentive Mechanisms" at the 20th anniversary global annual meeting of the International Financial Forum (IFF) that China should continue to actively participate in global discussions on climate change rules, play a greater role in formulating rules, and use incentive mechanisms to a greater extent. To use the incentive mechanism, we must first understand and develop the carbon market. He pointed out that the national carbon market, with a large coverage but low trading volume, is not enough to form an incentive mechanism for the current carbon market price, and needs to be balanced in all aspects. In addition, China's carbon market is relatively fragmented, and the prices and styles of each market are still inconsistent. In the future, the interrelationship between China and other developing countries, as well as the European carbon market, will need to be considered. He believes that global coordination is needed in the development of regulations and incentives, and that coordination between China and the United States is very important, because China and the United States are two big carbon emitters, and there should be a reduction in mistrust to enhance coordination.

Zhou Xiaochuan

Co-chair of the IFF General Assembly

Former Vice Chairman of the National Committee of the Chinese People's Political Consultative Conference

Former Governor of the People's Bank of China

(The following is the content of the speech)

My feeling is that China should continue to actively participate in the global discussion on rules and play a greater role in formulating rules. China also needs to use incentives to a greater extent, and although some of them have been used, there are still gaps. To use the incentive mechanism, the first thing is to understand and develop the carbon market. At present, everyone in China has established a national carbon market in Shanghai, which still covers a large area, but the trading volume is very low, and the role is still very limited. The first reason here is that there are too many free allowances, and sometimes there is even a surplus of free allowances, so the real formation of carbon prices and the incentive mechanism are not enough, which of course everyone needs to balance in all aspects.

In addition, the carbon market is still relatively segmented, we have Guangzhou, China's relatively large Guangzhou carbon market, we also have the Tianjin carbon market, and Beijing's green exchange, which is mainly for resource quotas, and Shanghai, the separation and price inconsistency of these markets still exist. In the future, we will also need to consider the interrelationship between the carbon markets of China and other developing countries and the European carbon market.

Then there is another point, that is, electricity, gas, oil, mainly refers to automobiles, in this regard, the improvement of user awareness and cost control is not enough. Another important aspect is whether the house has good thermal insulation performance, how much carbon can be emitted or air conditioning heating, and the gap in the insulation structure of the house is also quite large, or it should be greatly improved, which also costs money. There is also a large global funding gap for investment in this area.

There needs to be global coordination in terms of the development of regulations and incentives, and I personally think that one of the global coordination is that the coordination between China and the United States is very important, because China and the United States are two big carbon emitters, and there should be less mistrust to enhance coordination.

（以上为Zhou Xiaochuan在国际金融论坛(IFF) 20周年全球年会“应对全球气候变化：法则与激励机制”分论坛上的发言节选）

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