Carbon market to be initiated this month
China's national carbon emissions trading market will commence trading this month with all preparatory work ready, the Ministry of Ecology and Environment said on Wednesday.
The first batch of trading will be among the power companies, and market participants will be expanded to include other industries afterward, said Zhao Yingmin, vice minister of ecology and environment.
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.
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.
Under the scheme, companies are assigned quotas for carbon emissions based on their output and industry-specific factors, and can sell excess emission allowances to those in need of more pollution quotas. The system would incentivize the low-carbon transition of firms.
China's carbon market started with local pilot projects. In October 2011, carbon emissions trading were launched in seven provincial-level regions, including Beijing, Tianjin, and Shanghai.
Carbon emissions by the 2,000-plus power companies covered in the first batch of trading are estimated to exceed 4 billion tons per year. This means China's carbon trading market would become the world's largest in terms of the amount of greenhouse gas emissions covered.
Regarding pricing, Zhao said it is very important as the carbon trading market will use price signals to guide the optimal allocation of carbon-emission reduction resources, thereby cutting the emission reduction costs of the whole society.
As the national carbon market has not yet started, it is hard to say what the carbon price will be, Zhao said.
However, judging from the operation of the pilots across the country, the weighted average carbon price in the past two years has been around 40 yuan per ton, he added.