The Chinese city of Tianjin has launched the country’s fifth emissions trading scheme as the world’s biggest-emitting nation takes another step towards reining in its impact on the environment.
The newest of China’s carbon markets caps carbon dioxide (CO2) emissions from iron and steel producers, chemical facilities, power and heat generators, and oil and gas exploitation.
Reuters Newsagency reports the government at the opening ceremony announced five initial trades at US$4.28 and US$4.61 for a total of 45,000 permits.
Power companies Hanergy and Huaneng Carbon Assets Management, oil and gas firm PetroChina and trading house Citic Securities were among the buyers in the first transactions, according to the local government.
The opening trades put Tianjin’s initial carbon price at the low-end of other Chinese markets.
The central government aims to cut greenhouse gas emissions per unit of GDP to 40-45 per cent below 2005 levels by the end of this decade, and has said it wants to use carbon trading as its key tool to achieve that market.
The Tianjin scheme, launched hot on the heels of similar markets in Shenzhen, Shanghai, Beijing and Guangdong province, will make 114 of the city’s top emitters pay for each tonne of CO2 they emit beyond a cap they have been given by the government.
Sun Zhenqing at the Tianjin University of Science and Technology, one of the chief designers of the scheme, told Reuters that 160 million permits would be issued each year.
He said 15 per cent of those would be set aside for new entrants or held in reserve in case the government wanted to adjust supply.
Normally in emissions markets, one permit equals one tonne of carbon dioxide.
However in Tianjin, Mr Sun said, in cases where a supplier and a consumer of a tonne of CO2 are both covered by the scheme they would both have to hand over permits to the government for it, leaving the amount of emissions covered by the Tianjin market unclear.
The city’s Development and Reform Commission (DRC) would not comment on the size of the cap or how it was calculated.
However, the sectors brought into the scheme emit around 41 million tonnes of CO2 per year, suggesting that there could be a surplus of permits available.
