BEIJING, July 22 (Reuters) - China will launch domestic carbon trading during the next five years, the China Daily reported on Thursday, citing a closed-door meeting of officials from ministries, enterprises and think tanks.
Officials have reached consensus on the need for carbon trading as a way to help China meet its target to improve energy efficiency by 2020, but there is still no agreement on the mechanism that should be used, the paper said.
China is still struggling to achieve a target to cut energy intensity -- defined as the amount of energy used to generate one unit of gross domestic product -- by 20 percent between 2006 and the end of 2010.
Efforts to hit that target have focused on administrative tools, such as contracts in which the top 1,000 energy consumers promised the government to improve their energy efficiency, but the meeting agreed such measures would be too expensive in future, the paper said.
It quoted one participant, Tang Renhu from the low-carbon centre at China Datang Corp, a major power generator, as saying there were differences over whether pilot projects should start from one industry or a certain area.
Possible sectors for pilot carbon trading schemes were carbon-intensive industries such as coal-fired power generation, he said.
China already has some voluntary carbon trading. The plan to introduce wider carbon trading would be strictly separated from ongoing international negotiations for a successor to the Kyoto Protocol, an unnamed participant at the meeting told the paper.
China has surpassed the United States as the world's top emitter of greenhouse gases and is struggling to reduce emissions and pollution because of its reliance on coal, a cheap but dirty fossil fuel.
It is also expected to become the world's top energy user, although the precise moment of reaching that milestone is debated. China's National Energy Administration this week rejected an assessment by the International Energy Agency that China was already using more energy than the United States. [ID:nTOE66J02Y]
China's government has set a new target of cutting carbon emissions per unit of GDP to 40-45 percent of the 2005 level by 2020, committing the country to doing more with less.
The five-year plan for energy, due to be unveiled within months, will push for wider use of energy sources with lower emissions, such as hydropower, wind, nuclear and gas. Coal will be expected to account for 63 percent of energy use by 2015, down from 70 percent now.
China will need to invest 5 trillion yuan ($738 billion) to achieve its plans for clean energy by 2020, Jiang Bing, head of the development and planning department of the National Energy Administration, said earlier this week.
For a factbox on China's soaring energy consumption, please click [ID:nTOE66502J]
Editing by Ken Wills $1=6.776 Yuan