August 25, 2010 / 8:22 AM / 9 years ago

China CO2 trading scheme to start with power sector -report

BEIJING, Aug 25 (Reuters) - China’s massive power sector is likely to be the first to push ahead with a pilot emissions market, the official China Power News said on Wednesday.

Quoting a source at the National Development and Reform Commission, the newspaper said carbon trading would first take place within state-owned group companies, allowing individual power plants with varying levels of efficiency to buy and sell credits from one another.

The profits of big state-owned companies are calculated on an aggregate basis, so an internal trading scheme would not hurt their bottom line, the report said.

Sectors such as oil and chemicals were also high on the list of possibilities for pilot carbon schemes, it added.

China is currently drawing up plans and policies designed to meet its CO2 emission targets for the 2011-2015 period, and they are expected to include a broad commitment to market-based mechanisms like carbon trading.

Analysts and government researchers said sectoral or regional trading platforms were likely to be introduced first.

A total of 13 pilot low-carbon cities and provinces have already been asked by the NDRC to submit their own emission reduction plans for 2011-2015, including their use of trading platforms.

China currently has more than 20 regional environmental exchanges handling programmes such as sulphur dioxide and chemical oxygen demand cuts, as well as small-scale voluntary carbon credit trade.

But the regional exchanges are unlikely to play any role in a government-led emissions scheme. Another NDRC official told the Shanghai-based 21st Century Business Herald last week that Beijing would not allow the exchanges to set up competing trading platforms.

Reporting by David Stanway, Editing by Ken Wills

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