Hubai Province became the sixth Chinese area to launch a carbon market yesterday as China deepens efforts to use market mechanism to slow a rapid growth in emissions and energy use.
The China Hubei Emission Exchange traded 510,000 tonnes of carbon allowances at 21 yuan (US$3.38) each yesterday, the lowest among China’s existing carbon markets. Twenty-two companies, including Hubei Energy Group and PetroChina, were involved in 19 trades yesterday.
In carbon trading, a cap is set on the amount of carbon dioxide that may be emitted, and the limit is given to participating firms in the form of carbon credits, or the right to discharge a specific volume. Companies have to buy credits for emissions above allocated quotas on the platform.
China has pledged to cut greenhouse gas emissions per unit of gross domestic product to 40-45 per cent below 2005 levels by 2020. Carbon trading is seen as a key tool to help achieve that target.
The government has chosen seven cities and provinces for the carbon trading trial. Last year, Shenzhen, Shanghai, Beijing, Tianjin and Guangdong Province launched their emission trading markets. Chongqing will be the last to do so.
China plans a national carbon trading system after 2015 following the regional trials.
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