BEIJING, March 15 (Reuters) - China is expected to impose unified national standards when it launches a national emissions trading scheme next year, an expert familiar with the design process said this week.
China aims to include more than 10,000 of its biggest emitters in the nationwide trading scheme, that will build on the country's seven pilot exchanges that have been in operation since 2013.
Local authorities will still be given some leeway to decide which industries will participate in the scheme, which forces emitters to buy permits to cover their emissions, said Duan Maosheng, who has been involved in designing the market.
"The central government should set out the key standards that local authorities can execute with some flexibility," Duan said at a conference in Guangdong.
The national scheme faces the challenge of integrating the local pilot schemes, which trade different types of carbon permits at prices that vary from 8 yuan ($1.23) in Shanghai to 51 yuan in Beijing. Delegates at China's parliament last week described the situation as "chaotic".
Duan called on the central government to create unified products and also to set unified qualifications for trading institutes and data auditors.
He also cautioned that the likely introduction of carbon derivative products, including futures, could lead to regulatory confusion as the CO2 market is supervised by the National Development and Reform Commission and derivatives by the China Securities Regulatory Commission (CSRC).
Guangdong has already won approval from China's cabinet to build a futures exchange, with carbon as its first online product, although details have yet to be disclosed.
Shanghai's pilot CO2 exchange is also planning to offer forward-traded carbon contracts in September at the Shanghai Clearing House.
Duan said he expected the national market to kick off in the second half of next year, giving the central government time to set national and provincial emissions caps, as well as quotas for the free allocation of permits.
However, it has not yet been decided how permits now being traded on the regional exchanges will be handled, with a supply surplus likely to weigh on prices if they are all accepted on the nationwide market.
To avoid the price volatility, Duan suggested the national market have a price adjustment mechanism to help match supply and demand.
Lu Qizhou, former general manager of the China Power Investment Corporation said on the sidelines of China's parliament last week that he expected the government to set an initial carbon price at 20-30 yuan per permit. ($1 = 6.5192 Chinese yuan renminbi) (Reporting By Kathy Chen and David Stanway; Editing by Richard Pullin)