TIANJIN/BEIJING Dec 26 The Chinese city of Tianjin on Thursday launched the country's fifth emissions trading scheme as the world's biggest-emitting nation took another step towards reining in its impact on the environment.
The newest of China's carbon markets caps CO2 emissions from iron and steel producers, chemical facilities, power and heat generators, and oil and gas exploitation.
Five initial trades at 26 and 28 yuan ($4.28 and $4.61) for a total of 45,000 permits were announced by the government at Thursday's opening ceremony.
Power companies Hanergy and Huaneng Carbon Assets Management, oil and gas firm PetroChina Co Ltd and trading house Citic Securities were among the buyers in the first transactions, according to the local government.
The opening trades put Tianjin's initial carbon price at the low-end of other Chinese markets.
The central government aims to cut greenhouse gas emissions per unit of GDP to 40-45 percent below 2005 levels by the end of this decade, and has said it wants to use carbon trading as its key tool to achieve that market.
The Tianjin scheme, launched hot on the heels of similar markets in Shenzhen, Shanghai, Beijing and Guangdong province, will make 114 of the city's top emitters pay for each tonne of CO2 they emit beyond a cap they have been given by the government.
Sun Zhenqing at the Tianjin University of Science and Technology, one of the chief designers of the scheme, told Reuters that 160 million permits would be issued each year, with 15 percent of those set aside for new entrants or in reserves in case the government wants to adjust supply.
Normally in emissions markets, one permit equals 1 tonne of carbon dioxide.
But in Tianjin, Sun said, in cases where a supplier and a consumer of a tonne of CO2 are both covered by the scheme they would both have to hand over permits to the government for it, leaving the amount of emissions covered by the Tianjin market unclear.
The city's Development and Reform Commission (DRC) would not comment on the size of the cap or how it was calculated.
However, the sectors brought into the scheme emit around 41 million tonnes of CO2 per year, suggesting that there could be a surplus of permits available.