China's emissions trading scheme to be a 'game changer' … eventually, experts say

China's ambitious national emissions trading scheme is a "game changer" in the long term but current power prices and high equipment costs will make it hard for the renewable energy sector to benefit from it in the foreseeable future, analysts said.

The trading system, announced in a joint US-China climate statement during President Xi Jinping's state visit to the United States in September, stated that the new scheme would cover "key industry sectors such as iron and steel, power generation, chemicals, building materials, paper-making, and non-ferrous metals".

Experimental programmes have been introduced to seven provinces since 2012.

"Over time, the significance of that will increase but in the short term, the emissions trading scheme - the difference that will make will just be marginal," Alexander Lui, managing director of Asia Environmental Partners and Olympus Capital Asia, said yesterday at the 's China Conference in Hong Kong.

He added that the relatively low price of conventional power and its equipment were major factors limiting the development of renewable energy.

Michael Tong, head of utilities, renewable and environmental research at Deutsche Bank, said although the renewable energy sector would benefit little in the short term, this would be the price the national economy needed to pay first as the country's industries were still heavily reliant on coal for power.

"The very harsh requirements on the carbon side will put a huge burden on the economy," he said.