By Li Hongmei
China will probably begin operations at five carbon trading markets out of the proposed seven testing markets by the end of this year, of which Beijing's and Shanghai's carbon trading markets will begin operations next week, according to media report citing comments by Xie Zhenhua, vice chairman of China's National Development and Reform Commission, the government body responsible for China's macroeconomic policy, at the recent Warsaw Climate Change Conference.
Xie said Shanghai will begin carbon trading on Nov. 26, while Beijing's will do so on Nov. 28. Tianjin will definitely and Guangdong will likely begin carbon trading by the end of this year, he said.
In June, Shenzhen was the first city in China to launch carbon trading. The other two were Chongqing and Hubei.
After the test run in seven areas, the commission has confirmed that it will establish a national carbon trading exchange in the future, Shanghai-based National Business Daily reports, citing an unnamed government source.
Carbon emissions trading is a form of emissions trading that specifically targets carbon dioxide, calculated in tonnes of carbon dioxide equivalent or tCO2e, which currently constitutes the bulk of emissions trading. This form of permit trading is a common method countries utilize in order to meet their obligations specified by the Kyoto Protocol, namely the reduction of carbon emissions in an attempt to mitigate future climate change.
Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University, said carbon trading is a market mechanism designed to reduce emissions of carbon dioxide, but it can easily become a new speculated capital market.
Xie previously said that as China's carbon trading is just in its birthing period, short-term volatility doesn't mean that the trading will lead to artificially high prices in the long term. The prices should gradually stabilize as supply and demand will reach a balance, he said.