China’s national carbon market to start trading in July

This undated photo shows a wind power plant in Zhangjiakou, North China's Hebei province. (PHOTO / XINHUA)

Online trading in China's national carbon market will begin in July, Zhao Yingmin, vice-minister of Ecology and Environment, announced on Wednesday.

The program will replace the European Union's system, launched in 2005, as the world's largest carbon trading system. Carbon trading is the process of buying and selling permits to emit carbon dioxide or other greenhouse gases.

To begin with, the Chinese market will only involve 2,225 companies in the power generation sector, but will be extended to include seven other major carbon-emitting industries, including steel, chemicals and papermaking, according to the Ministry of Ecology and Environment

Designated emitters will be given the right to release a certain amount of greenhouse gases. At the end of each cycle, emitters that exceed their permitted amount will have to buy unused permits to offset the extra emissions.

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The system is viewed as a financial instrument that could help enhance efficiency in reducing carbon emissions through the help of market mechanisms.

To begin with, the Chinese market will only involve 2,225 companies in the power generation sector, but will be extended to include seven other major carbon-emitting industries, including steel, chemicals and papermaking, according to the ministry.

The ministry will roll out regulations on the trading, and improve relevant standards and management schemes while expanding the trading varieties and methods, Zhao said.

Carbon emissions by the 2,000-plus power companies covered in the first batch of trading are estimated to exceed 4 billion tonnes per year. 

As data authenticity and accuracy is the very basis of trading, the ministry would work to ensure the quality and transparency of emission data, Zhao said, adding that current data are basically in line with government requirements.

China began a pilot market project in October 2011 in seven parts of the country, including Hubei province, Beijing and Shanghai.

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As of June, the pilot has involved almost 3,000 major emitters from over 20 industries and with a total turnover of more than 11 billion yuan (US$1.7 billion), covered emissions equivalent to 480 million metric tons of carbon dioxide.

The carbon trading market is expected to be an important scheme for China to realize the goal of peaking carbon dioxide emissions by 2030 and achieving carbon neutrality by 2060.

With Xinhua inputs