China’s Giant Carbon Market to Start Trading This Week
China’s national carbon market, which will become the world’s largest emissions trading system, will initially cover more than 2,200 companies in China’s power sector.
The program was announced more than three years ago, and takes over from regional pilot projects that have been around even longer. This year it will cover power companies that account for about half of the country’s and 14% of the world’s energy-related emissions. China’s market will eventually grow to encompass more industries, such as steel- and cement-makers.
The market works fairly simply. The Chinese government gives every power plant the right to a certain amount of pollution in a given year. Pollute less than that, and you can sell excess pollution rights, or allowances. If you want to pollute more, you have to buy extra allowances.