On the heels of launching two more carbon markets, in Beijing and Shanghai, China will next month launch the world’s second biggest, after the European Union, in the province of Guangdong.
China’s most populous province, Guangdong, with more than 100 million people, is to launch a carbon permits market in December that will rivalled only by that of the EU.
China, the world’s biggest emitter of greenhouse gases, has pledged to reduce its carbon dioxide emissions per unit of GDP by up to 45 per cent by 2020.
Reuters Newsagency reports Shanghai launched a carbon market on Tuesday and Beijing followed today.
The scheme in heavily industrialised Guangdong will cap carbon dioxide emissions from 202 companies at 350 million tonnes for 2013, according to a statement on the website of the provincial Development and Reform Commission.
Most permits, including 97 per cent of what emitters get, will be handed out free on December 10.
However, the local government will also auction 29 million permits for this year from mid-December, it said, without giving a specific date.
The Guangzhou-based China Emissions Exchange will then launch a secondary market for permits by the end of December.
Among the firms covered by the scheme, which will dwarf the markets in Australia,which the conservative Liberal-National government is trying to repeal, and California, are state-owned power companies Datang, Huaneng and Shenhua, along with manufacturers and petrochemical firms.
Opening bids for the auctioned permits should be made at US$9.85, the government said, but the Guangdong emissions trading scheme does not have a formal floor price.
Reuters reports carbon permits on the Shenzhen market, China’s first, ended at $13.12 on Tuesday while those in Shanghai made their debut the same day at $4.87.
Beijing’s market will be around a quarter the size of the Guangdong scheme in terms of CO2 covered.
Further markets are due to open in Hubei province and the cities of Chongqing and Tianjin in 2014.
The permits auctioned in Guangdong will include 10.5 million for the quotas of the 202 emitters.
The rest are from a reserve of 38 million permits set aside to cover new entrants and various “adjustments”, the local government document said, without offering further detail.
Guangdong will keep the level of auctioned permits at three per cent of quotas next year but from 2015 some 10 per cent will be sold.
In total, the seven pilot markets in China will regulate around 700-800 million tonnes of carbon dioxide annually.
That’s roughly equal to the annual emissions of Germany, and will cover areas accounting for nearly a third of China’s gross domestic product.
The regional markets are meant to generate valuable experience as central government is planning a national trading scheme later in the decade.
