Carbon emissions trading scheme to start in Feb

China’s carbon trading system will start operating in February, the environment ministry said as the country takes steps towards decarbonizing its economy by 2060.

The ministry issued the rules yesterday allowing provincial governments to set pollution caps for big power businesses for the first time.

Firms can buy the right to pollute from others who have a lower carbon footprint, but the program is expected to drive down overall emissions by making it more costly to do so.

“This is one of the most exciting developments for the world’s largest carbon market in the recent rollercoaster year,” said Zhang Jianyu, vice president of the Environmental Defense Fund China, which has consulted with the government on emissions trading.

Under the new rules, more than 2,200 firms that emit over 26,000 tons of greenhouse gases per year can start trading their emission quotas from February 1.

China’s nationwide system is expected to eclipse that of the European Union to become the world’s largest Emissions Trading Scheme.

Once fully operational, the ETS will cover about a third of China’s national emissions, according to the International Carbon Action Partnership.