China Carbon Credit Platform

Liu Shijin, former deputy director of the Development Research Center of the State Council: Responding to climate change with the idea of historical intertemporal trading

Release Time1 month ago

At the 2024 Annual Meeting of the Beautiful China 100 Forum, Liu Shijin, Deputy Director of the Economic Committee of the 13th National Committee of the Chinese People's Political Consultative Conference (CPPCC) and former Deputy Director of the Development Research Center of the State Council, pointed out that "the challenge of the EU border adjustment mechanism should be addressed with the idea of historical intertemporal transactions. ”

In terms of promoting global action on climate change, the implementation of the EU's carbon border adjustment mechanism has once again brought the dispute between developed and developing countries over the rights and responsibilities of climate change to the forefront. The transition period of this mechanism began on November 1, 2023, and will be officially implemented in 2026. Under this mechanism, the EU imposes a carbon price comparable to that within the EU on imported goods from the five major industries of cement, steel, aluminum, fertilizer and electricity, thereby contributing to the reduction of global greenhouse gas emissions. However, at the same time, compared with the European Union, which has already started the construction of carbon emission trading markets, developing countries usually have more high-carbon export products, which leads to the imposition of carbon border taxes to increase export costs, and ultimately reduces their competitiveness and decarbonization capabilities, forming "green trade barriers" to a certain extent.

How to deal with this challenge and jointly respond to global climate change with mutual cooperation rather than confrontation, Liu Shijin proposed that it is necessary to construct a global national carbon budget and carbon asset and liability account, and respond to the challenge of the EU's carbon border adjustment mechanism with the idea of historical intertemporal trading. At the same time, on this basis, developing countries should strive to shift to the track of responding to climate change with green innovation.

Liu Shijin stressed that the first step is to build carbon budgets and carbon asset-liability accounts for different countries. Liu Shijin proposed that all countries in the world should clarify their own carbon emission deficit or black letter, and the calculation of carbon emissions should start from the beginning of the industrial revolution to achieve the goal of carbon neutrality. Second, we should focus on innovation and accelerate the development of green and low-carbon industries. Through the development of green and low-carbon industries, on the one hand, carbon emissions can be reduced, and on the other hand, green and low-carbon industries have also become a new economic growth point. In this way, developing countries can overcome the dilemma of not industrializing to get out of poverty, but using traditional technologies to exacerbate the climate crisis.

Secondly, it is necessary to clarify the idea of historical intertemporal trading. After clarifying the "deficit square" and "black square" of carbon emissions, Liu Shijin believes that in terms of green investment, it should be viewed as a historical intertemporal transaction. Developed countries can use the first-mover advantage to provide green investment for developing countries and accelerate the development process of developing countries, but the provision of green technology should not be regarded as gratuitous aid and handouts, but as the repayment of historical debts by developed countries. Based on this line of thinking, Liu Shijin believes that the tax revenue from the EU's carbon mediation mechanism could set up a decarbonization transition fund, under which the deficit party would provide green technology and finance to the black side. These funds leverage more funds through other blended financing methods to invest in green and low-carbon technologies that can be easily adopted by developing countries.

Finally, it is necessary to organically combine the solution of the debt problem with the promotion of green development. In addition to direct intertemporal transactions, cooperation between developed and developing countries can also be carried out through financial means. For example, the debt of developing countries to developed countries can be forgiven by replacing them with green technologies and investments, as part of the historical intertemporal transactions between the two sides, so as to achieve the goal of killing multiple birds with one stone.