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Can restriction talk be more than hot air?

The industrial town of Taiyuan doesn’t look much of a place for landmarks. True, the capital of Shanxi province is often compared in environmental literature to Los Angeles, but only because it is surrounded on three sides by mountains to create a similar trap for smog. But this coal-mining city, largely unknown to the west despite having as many inhabitants as Rome, has a claim to fame: it is the birthplace of emissions trading in China.

Cleaning up in China


In 1998 the World Bank gave Taiyuan the unhappy accolade of being one of the world’s most polluted cities.

China was sufficiently concerned about this to put in to its 10th Five Year Plan, for 2000 to 2005, a call for sulphur dioxide emissions in the city to be halved over that timeframe. Shanxi’s provincial government applied to the Asian Development Bank for a loan and technical assistance, aiming at bringing in the use of market-based instruments for air-quality management, and strengthening the ability of provincial agencies to implement them.

Sulphur dioxide trading is very different to carbon trading, for a simple reason: carbon emissions create a global issue, sulphur dioxide a local one. The whole premise for carbon trading is that a greenhouse gas wrecks the environment just as much if it is emitted in Beijing or Bradford. That is why it is considered legitimate to offset your emissions by supporting clean energy development on a completely different continent, the idea that underpins the Kyoto protocol’s clean development mechanism.

Sulphur dioxide, on the other hand, causes problems locally as opposed to globally.


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