Beijing carbon trading scheme launched to rein in China’s emissions

Beijing became the third city in China to launch a carbon trading scheme to regulate soaring carbon emissions from its main power generators and manufacturers, after an announcement on Thursday.

The scheme was launched last week and sees the capital follow in the footsteps of Shenzhen and Shanghai, with a scheme in Guangdong province set to commence in December that will be the second-biggest in the world after the European Union.

The markets are part of China's strategy to reduce its greenhouse gas (GHG) emissions per unit of GDP to 40-45 per cent below 2005 levels by 2020 as the country seeks to address future energy security issues, mitigate and limit the effects of climate change and stave off criticism in the international community for being a high carbon emitter.

The Beijing scheme will rein in emissions from 490 power and heat generators, manufacturers and large buildings in China's smoggy capital.

The government has not released information on how many permits have been issued to scheme participants, but has said 42 per cent of the city's total CO2 emissions will be covered.

Coal-fired power plants, which contribute to Beijing's huge air pollution problem and were linked in June to 60 per cent of the region's premature deaths in a Greenpeace report, will receive free permits for 2013 equal to 99.9 per cent of their average emissions over 2009 to 2012.

Manufacturers will receive permits this year equal to 98 per cent of their historical emissions, falling to 94 per cent in 2015.

Those that emit more than they have permits to cover can buy additional permits, formally called Beijing Emissions Allowances (BEAs), from others or use offset credits issued by the central government, known as Chinese Certified Emissions Reductions (CCERs).