S&P Global — 1 July 2024
Daily Update: July 1, 2024
China’s Tanpuhui Scheme, Decarbonizing Consumer Behavior
By Nathan Hunt
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Carbon taxes are deeply unpopular with the industries most in need of decarbonization. They pass on costs incurred to consumers with a remarkable degree of transparency about the reasons for higher prices. This quickly renders carbon taxes equally unpopular with consumers. However, any large-scale decarbonization of the global economy will require changes in consumer behavior. Companies continue to engage in carbon-intensive activities because consumers demand the resulting goods and services. But if the stick won’t change behavior, why not try the carrot? That has been the approach of China’s Tanpuhui carbon scheme — a consumer-level carbon emissions reduction program that incentivizes green behaviors.
The roots of the current scheme can be traced back to 2013, when former Chinese climate envoy Xie Zhenhua first proposed incentivizing individuals to reduce emissions in daily life. In 2016 a number of provincial governments introduced incentive-style efforts, and Ant Group, an affiliate of Chinese technology conglomerate Alibaba Group, launched “Ant Forest,” which rewarded consumers for certain behaviors by planting trees on their behalf. Based on the success of these pilot programs, in 2021 China committed to building Tanpuhui programs across the country. Tanpuhui can be loosely translated as "carbon inclusion." In June, 15 Chinese government bodies released a joint action plan for a national carbon footprint management system that placed Tanpuhui incentivized schemes at the center of Chinese decarbonization efforts.
Unlike carbon taxes, Tanpuhui schemes assess the price consumers are willing to be paid to change their carbon-intensive behaviors. Under different regional schemes, consumers can be rewarded for purchasing energy-efficient appliances, installing solar panels for households, recycling waste, taking public transport and driving electric vehicles. Consumers are typically paid in points that can be redeemed for perks and discounts on government services or products. Broadly, Tanpuhui-qualified behaviors can be divided into four categories: low-carbon transportation, purchasing low-carbon goods, water recycling and low-carbon lifestyle changes.
As well as being considerably more popular than carbon taxes, Tanpuhui schemes also establish a price for carbon — the price necessary to forgo carbon-intensive behaviors. The fact that consumers receive money to change their behavior rather than paying money not to change their behavior doesn’t change the underlying pricing mechanism. This means that Tanpuhui schemes could be integrated with broader carbon markets. Chinese authorities have already established that emissions reductions achieved through Tanpuhui schemes cannot be “double counted” under the China Certified Emission Reduction program, Verra's Verified Carbon Standard, Gold Standard or the UN's Clean Development Mechanism.
"We are still carving the path to connect carbon markets for producers and the carbon markets for consumers. We are still exploring how to optimize the values of the carbon assets linked to individual carbon accounts," Xie recently wrote.
Today is Monday, July 1, 2024, and here is today’s essential intelligence.
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40th Annual APPEC Conference (September 9 – 12)
Building on the success of previous years, APPEC 2024 promises to deliver another exceptional experience filled with thought-provoking discussions, expert insights and unparalleled networking opportunities. Join us, as we gather to explore the latest trends, challenges, and innovations shaping the global energy landscape.
—Register for the conference from S&P Global Commodity Insights