The national emissions trading scheme launched by China could reduce the country’s carbon emissions scheme by three to six billion tonnes by 2060 according to analysis from global asset manager Schroders and the Asia Investor Group on Climate Change (AIGCC).
While the scheme’s initial impact may be limited, the AIGCC forecasts that material change should be evident by the mid-2020s for the covered industries and companies. The AIGCC includes asset owners and managers, with combined assets under management (AUM) exceeding US$26 trillion. The group's members come from 13 markets.
In its report, co-authored with Schroders, the AIGCC states that by 2060, emissions should be reduced by 30 to 60% from current levels, depending on the rate of reduction in intensity caps, expansion of industry coverage and carbon inhibition factor.
The scheme is also likely to have a long-term impact on revenue and profit for the companies involved, especially companies and utilities involved with coal and cement.
The AIGCC and Schroders analysis describes the scheme as potentially “one of the most significant drivers of carbon abatement in Asia” and instrumental in helping China meet its stated target of carbon neutrality by 2060.
“Investors need to understand the growing and future impact of the national China ETS on a range of carbon-intensive industries and companies as part of their ongoing management of climate risk across their portfolios,” said Wong Dan Chi, AIGCC vice chair and Schroders head of ESG integration in the Apac region.
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