China Launches Pilot Carbon Trading Scheme

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China, the world’s bigger emitter of carbon dioxide, has launched its first carbon trading platform in the southern city Shenzhen, with plans to open similar schemes in seven other regions by 2014.

In a bid to reduce the amount of carbon dioxide emitted per unit of gross domestic product by 40-45% from 2005 levels by 2020, China on Tuesday launched its first pilot carbon emissions exchange in the city of Shenzhen, across the border from Hong Kong, one of seven testing grounds Beijing picked in 2011 to try out emissions trading before deciding whether to launch a national system from 2015.

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China will pilot its scheme in six other regions, namely Beijing, Shanghai, Tianjin, Chongqing as well as the provinces of Hubei and Guangdong.

Carbon markets, also known as emissions trading or cap-and-trade schemes, have become one of the most widely used ways of putting a price on the carbon dioxide emissions produced by burning fossil fuels such as coal and gas – emissions that scientists say are driving potentially dangerous global warming.

Such markets encourage factories and other major carbon producers to curb pollution by capping the volume of emissions allowed and forcing companies to surrender permits to cover their annual emissions.

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The newly-launched Shenzhen Carbon Exchange will cover 635 industrial and construction companies whose combined emissions added up to over a third of all Shenzhen’s emissions in 2010. Officials are hoping to add transport firms as well as major companies that consume oil, gas, coal and power to the exchange.

While the Shenzhen exchange will not immediately lead to a big cut in China’s carbon emissions, it represents a statement of intent by Beijing, said environmental campaigners.

"This is just a baby step when you look at the total quantity of emissions, but it enables China to establish institutions for carbon controls for the first time," said Li Yan, head of environmental group Greenpeace's climate and energy campaign in China.

Because of its reliance on coal and heavy industry, China has emerged as the top producer of climate-changing carbon emissions, ahead of the United States, though its per capita emissions remain far below the US.

China has no targets to reduce absolute carbon emissions and government officials have said it will continue to rise until around 2030.

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