BEIJING, Dec 12 (Reuters) - China’s Guangdong will use revenue from its carbon permit auctions to set up a 600 million yuan ($97 mln) fund to invest in emission reduction projects and develop the province’s CO2 trading market, a local official told the Southern Daily newspaper.
The province, hosting the biggest of seven pilot emissions trading schemes in China, aims to launch the new fund next year, the paper cited Hong Jianwu from the Guangdong Development and Reform Commission (DRC) as saying.
Hong said 80 percent of future permit auction revenue would be added to the fund.
The province will sell a total of 8 million permits to scheme participants for the 2014 compliance year over four auctions.
The fund will make Guangdong the first Chinese province to earmark revenue from carbon markets for investment in projects that cut pollution.
The Guangdong market currently covers nearly 200 power generators, petrochemicals and manufacturing companies, but Hong told the paper more industries would be added from 2015.
The scheme will be gradually expanded to also include ceramics, non-ferrous metals, textiles, paper, chemicals, transport and the building sector, he said.
In addition, individuals might be required to buy CO2 permits when applying for licence plates for new cars, he said.
The DRC is also studying the possibility of linking its market with the Shenzhen emissions trading scheme.
Shenzhen is located in Guangdong province, but operates a separate carbon market because of its status as a special economic zone.
It remains unclear how or when such a link might be established. The central government plans to launch a national emissions market in 2016 that will become fully operational by 2020. (Reporting by Kathy Chen and Stian Reklev; Editing by Joseph Radford)