On Thursday China began trading in Guangdong’s carbon permit market, which is expected to be the world’s second-largest market after the European Union in terms of carbon dioxide emissions covered. It is far larger than either the Australian or Californian emissions trading schemes.
The Chinese government has approved seven pilot carbon trading exchanges in total, with Shenzhen being the first to launch in June followed by Beijing and Shanghai. However, Guangdong, which is home to over 100 million people and has an economy larger than Indonesia, far outweighs the other pilot projects launched to date. These pilot projects are working toward a national trading system that could be introduced within the next few years, the government has said.
Aside from being the largest carbon market to operate in China yet, Guangdong is also the first to use auctions to distribute emissions permits, rather than offering them all initially for free.
The Guangzhou-based China Emissions Exchange oversaw the first day of trading, in which, “price level matched expectations, following a government auction of 3 million permits sold at 60 yuan, the official price floor for auctions, on Dec. 16,” according to Reuters.