Trading soon to start in China's carbon market

Online trading for China's national carbon market will be launched soon, Zhao Yingmin, vice-minister of ecology and environment, announced on Wednesday.

Aerial photo taken on Aug 19, 2020 shows wind turbines in Jiucaiping scenic spot in Southwest China's Guizhou province. [Photo/Xinhua]

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

Designated emitters will be given the right to release a certain amount of greenhouse gas. At the end of each cycle, emitters will have to buy unused permits from the market if they emit more than the amount they are given.

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

The Chinese market will currently only involve 2,225 companies in the power generation sector, though it will be extended and also include another seven major carbon-emitting industries, including steel, chemicals and papermaking, according to the ministry.

China started its pilot market in 2013 in seven areas, including Hubei province, Beijing and Shanghai.

As of March, the pilot market has involved almost 3,000 major emitters from over 20 industries.

With total turnover of more than 10 billion yuan ($1.5 billion), it has covered 440 million metric tons of carbon dioxide emissions.