China offers incentives to curb carbon emissions

At a gleaming new metro station on the edge of Shenzhen, the local government is promoting "carbon coins" to commuters to earn and trade for shopping vouchers and travel cards in a push to get households to join China's fight against climate change. The southeastern city's "Carbon Road for Everyone" scheme, which rewards people for logging their use of public transport, is one of dozens around China encouraging citizens to ditch cars, plant trees and cut energy use. The so-called "carbon inclusion" programmes are part of the ruling Communist Party's campaign to mobilise the whole of society, not just industry, to transform the world's biggest greenhouse gas emitter into a carbon-neutral country by 2060. The country's emissions reduction task is massive, potential cuts by individuals could be huge. A 2021 study by the China Academy of Sciences said households contribute more than half of China's total emissions of over 10 billion metric tons per year.

"Carbon inclusion is a huge platform and an effective way to mobilise the public to practice low-carbon, zero-carbon and negative-carbon activities," said Xie Zhenhua, China's top climate envoy, during the launch of a government carbon inclusion committee in August. Eventually, China wants the schemes to be integrated into national emissions trading and generate credits that can offset emissions by industrial polluters, government plans show.

China's carbon inclusion ambitions have been in gestation since 2015, when the southeastern province of Guangdong published rules on how to convert low-carbon activity into credits. Since then, dozens of schemes have emerged across the country, accessing personal data like step counts, the use of transport, and the purchase of efficient or environmentally friendly products to generate carbon coins.

Banks have also been testing "personal carbon account" systems. The People's Bank of China set up a pilot "carbon to gold loan" scheme in the city of Quzhou, allowing customers to earn carbon points that could improve credit ratings. Other countries have toyed with the idea of personal carbon trading, with pilot schemes set up in Finland and Australia's Norfolk Island. The British environment ministry also commissioned a study into the possibility in 2006 but concluded it was not yet politically or economically feasible. Singapore is currently running a scheme that rewards efficient electricity users with "leaf" tokens that can be exchanged for shopping vouchers.

"Various actors have tried voluntary schemes that do things like visualisations or the sharing of energy or emissions data at a smaller scale," said Benjamin Sovacool, a professor of Earth and Environment at Boston University. "But they lack the scale and sheer scope of what the Chinese are conceiving, and they were not integrated into carbon coins, which is a clever idea."

A major challenge is how to commodify carbon dioxide emissions reductions from a wide range of human behaviour — including the way people go to work, heat their household or put out the trash.

"It's all about verification," said Yifei Li, professor of Environmental Studies at New York University's Shanghai campus. "When it comes to the level of variability, how people conduct their lives is so wildly different. That is a big problem." Zhang Xin, vice-chairman of the environment ministry's carbon inclusion committee, said better standards were needed to quantify low-carbon behaviour, warning in comments published this year that the proliferation of schemes "has resulted in confusion and inconsistency." Scholars also say it is unclear whether the schemes generate new cuts in carbon dioxide emissions or merely record those that happen anyway.

Shanghai said in regulations that came into effect this month its schemes would eventually be "fully connected" to the local carbon market, with enterprises allowed to apply to use household carbon cuts to meet targets. Guangdong also allows enterprises to meet 10% of carbon reduction obligations through carbon inclusion credits. China is still a long way from fulfilling such emissions trading ambitions. Most users remain passive participants: one Beijing-based scheme claims more than 30 million users, but only 1.4% are active, according to research published this year. And there are worries the carbon inclusion schemes could let industrial polluters off the hook by shifting the burden of emission cuts to households. "The direction they're going in at the moment is indeed to transfer climate responsibilities from these big firms and more towards individuals," said Li.

David Stanway and David Kirton, Reuters