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China completes pilot carbon market rollout

2014-06-20 14:37 Global Times Web Editor: Qin Dexing
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Southwest China's Chongqing launched its pilot carbon scheme on Thursday, the seventh and final one planned by the country as it looks for ways to rein in its rapidly growing greenhouse gas emissions.

Chongqing follows Shenzhen, Shanghai, Beijing, Tianjin, Guangdong and Hubei in launching a trading scheme that allows big local firms to buy and sell permits that cover their carbon emissions.

Choking pollution in China has brought pressure on the country to clean up its act.

Some participants at the Chongqing launch were skeptical about the effectiveness of the platform.

"It is a symbolic launch - all the deals announced today were negotiated at 30-32 yuan ($4.8-$5.2), and we bid for the volume at the same level as others, at 10,000 tons," said a buyer with a power company.

Only 16 deals were signed on Thursday, covering 145,000 tons of permits at a price of 30-31.5 yuan per ton.

A manager with one of the selling firms, Chongqing Iron and Steel Group, said he was not planning to make any more trades. He said his firm had been allocated 6.3 million tons in permits for 2013, despite reporting emissions of 6 million tons for the period.

"No one really needs to buy, and the permits are allocated in accordance with the emissions reported by the company itself, so no one will have a shortage," said the manager.

China has pledged that by 2020 it will reduce its carbon intensity - the amount of carbon emission produced per unit of economic growth - by 40-45 percent from 2005 levels. It has also promised to set up market mechanisms, such as the pilot schemes and a national one by 2017, to help meet its targets.

As of now, only a fraction of China's biggest industrial emitters are covered by the seven pilot platforms, while the plans for a national trading scheme also remain uncertain.

It is unclear whether a nationwide platform will be built on the foundations of the existing exchanges or from scratch, with the seven pilots now using different and largely incompatible standards and trading rules.

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