Preparations for the national carbon trading market have been completed and the scheme is awaiting a green light from State Council, according to Xie Zhenhua 谢振华 special representative for climate change affairs. The nationwide development follows seven pilot markets launched since 2013, which include nearly 3,000 major polluting enterprises and accumulated a trading volume of 197 million tonnes or 4.5 bn by September 2017. Thanks to the replicable experiences from the pilot markets, China is well-positioned to peak its carbon emissions around 2030, adds Xie.

However, it is still unclear when the carbon market will be launched. The initial 2017 target proposed in ‘13th 5-year work plan on controlling greenhouse gas emissions’ was recently reported to be postponed to beginning 2018, due to data unreliability and regulatory issues, says Wang Zhongying 王仲颖 Energy Research Institute vice director. In the early stages, the carbon trading scheme is expected to be conservative, comment industry insiders, referring to the possibility of incorporating only power generation into trading. This falls short of the eight sectors (petrochemcals, chemicals, power generation, building materials, ferrous metals, paper making, aviation and steel) laid out in ‘Working on key areas in the launch of nationwide carbon market’, notes Caixin.

Xie also mentions that no carbon futures or carbon tax will be introduced in the initial phase of policy implementation, emphasising concerns over excessive financial derivatives destabilising the market and the fledgling carbon market not focusing on developing financial products. Central government will stick to the core objective of using a carbon trading market to reduce carbon emissions, adds Li Gao 李高, Climate Change Department of National Development and Reform Commission vice director.

The trading platform will be located in Shanghai, while Hebei province will be in charge of registration, according to 21st Century Business Herald. Carbon allowance prices will largely be determined by the overall quantity of emissions set by NDRC, as the market is mainly influenced by supply and demand, says Liu Shuang 刘爽 Energy Foundation China program officer.