SHANGHAI (Interfax-China) -- China and the United States have agreed to cooperate more closely on the construction and management of strategic oil reserves, as well as establish a national sulphur dioxide emission trading scheme in China, state media reported today.
The agreements were reached at the third China-U.S. Strategic Economic Dialogue, which was held in Beijing and concluded yesterday.
Although details regarding how the two countries will cooperate over strategic oil reserve management are yet to be revealed, analysts say the move marks significant progress in U.S. efforts to bring China into the consortium of industrialized nations that share their oil reserve plans through the International Energy Agency (IEA). Members of the Paris-based agency are required to keep their current oil inventory volume and future stockpile plans transparent in order to avoid speculation on the international oil market.
China and United States will also work together to bring the amount of sulphur dioxide (SO2) in automotive fuels below 50 part per million (ppm), with China to import related advanced auto emission control technologies from the latter during the first half of next decade, according to state-run Xinhua news agency.
China also pledged to implement a national SO2 emission quota trading scheme in its power industry, one of the highest polluting industries in the country due to its dependence on coal as a feedstock, Caijing Magazine reported. No timetable or specific rules for the system have been made public, though it is known that the United States has agreed to provide necessary infrastructure development and management skills as well as technical support for the mechanism.
Through the adoption of such an emission trading scheme, the United States managed to bring SO2 emissions down to below 10 million tonnes in 2006, from more than 25 million tonnes in the 1980s. Annual costs attributed to emission cuts under the system stood at around $2 billion, much lower than expected, the report said.
China aims to bring annual SO2 emissions below 22.94 million tonnes by 2010, down from the 25.49 million tonnes recorded in 2005. Meeting the target is likely to face significant challenges, the report said.
In addition, the two nations will hold more talks early next year regarding the reduction of import tax and non-tax trade barriers for environmental protection products and services, according to the Xinhua report. Under international pressure to address its skyrocketing energy demands and pollution problems, China has set an ambitious goal to cut energy consumption per unit of GDP by 20% by 2010, or 4% annually, as well as reduce emissions by 10% for the targeted period.
Industry insiders predict that in the next five years, China will invest around $300 billion in equipment used for energy conservation and environmental protection, accounting for 30% of the global market. China's importation of such equipment from the United States could turn out to be a new breakthrough in efforts to reverse the mounting trade surplus between the two countries, according to the report.
(c) Interfax-China 2007. For more intelligence on Chinese metals and mining, contact David Harman in Hong Kong at david.harman@interfax-news.com or (852) 2537-2262.
