Shanghai starts carbon emission trading

Shanghai launched carbon emission trading on Tuesday, China's second market for compulsory carbon trading.

An initial 191 companies from industries such as iron and steel, chemical engineering and aviation have been included in the scheme.

Under the trading program, companies which belch out more than their fare share of emissions will be able to buy unused quotas on the market from companies which pollute less.

The quotas for 2013 to 2015 have already been allotted to the companies.

The market is based in the Shanghai Environment and Energy Exchange(SEEE). The SEEE will spell out risk management regulations on emission trading, put limits on price fluctuation and the amount quota one can buy.

Sanctions will be set up and violators will face fines up to 100,000 yuan (16,410 U.S. dollars).

Three deals, or 9,500-tonnes carbon quotas, have been traded thus far at prices ranging from 25 to 27 per tonne.

Shenzhen launched a carbon trading scheme in June, the country's first. The National Development and Reform Commission, the top economic planner, has also approved pilot carbon emission trading schemes in Beijing, Tianjin, Chongqing, Hubei and Guangdong.

The country has pledged to reduce carbon dioxide emissions 40 to 45 percent per unit of GDP by 2020, in comparison with 2005.