Guangdong to launch carbon permits market

Guangdong, a heavily industrialised province in China, plans to launch a carbon emission trading scheme next month, which will be the world's second largest after the EU.

The scheme to be launched in Guangdong, China's most populous province, will cap CO2 emissions from 202 companies at 350Mt for this year, the provincial Development and Reform Commission said on its website.

At total of 97 percent of the permits will be handed out free on December 10, but the local government will also auction 29 million permits for this year from the middle of the month, it said.

The Guangzhou-based China Emissions Exchange will then launch a secondary market for permits by the end of the year.

Opening bids for the auctioned permits should be made at 60 yuan (HK$76), the government said, but the Guangdong emissions-trading scheme does not have a formal floor price.

China, the world's biggest emitter of greenhouse gases, has pledged to reduce its carbon dioxide emissions per unit of gross domestic product by up to 45 per cent by 2020. Shanghai launched a carbon market on Tuesday followed by Beijing yesterday. 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 3 percent of quotas next year but from 2015 some 10 percent will be sold.

In total, the seven pilot markets in China will regulate around 700-800Mta of CO2, and will cover areas accounting for nearly a third of China's GDP.