Guangdong also plans to launch the CO2 trading mechanism in Shanghai and Beijing this week. Shenzhen carbon trading market was established in June this year.
China is the world's largest carbon dioxide emitter. At the initial stage of this mechanism, the government will allocate carbon emission quota to participating enterprises free of charge, which means that enterprises will only pay extra cost after they exhaust their own quotas. The carbon trading market has forced enterprises to buy emission permits from enterprises with residual quotas after they have exhausted their emission quotas. The four carbon trading markets in China are operating in the following ways.
Guangdong: in 2013, the absolute ceiling of CO2 emission of 202 enterprises in power generation, cement, steel and manufacturing industry was 350 million tons. In the next few years, ceramics, textiles, non-ferrous metals, plastics and paper making industries will also enter the mechanism. In the early days, companies will receive 97 per cent of the quota free of charge, while the rest 3 per cent will be obtained through auction. In 2015, the proportion of quotas obtained through auctions will rise to 10 per cent. At present, the government does not set the price limit of carbon emission quota, but it is suggested that the price of the first auction be RMB 60 per ton.
Beijing: the carbon trading in Beijing officially opened on November 28, covering 490 enterprises in power generation, manufacturing and large-scale construction industries. In 2013, the quota obtained by participating enterprises was equivalent to 98% to 100% of their average emissions from 2009 to 2011. This will gradually decline in the next two years and the quota for manufacturing will be reduced to 94 per cent in 2015. On April 30, the company must submit the emission report of last year, and the government will issue annual carbon emission quota to enterprises by June 30.
Shanghai: Shanghai mechanism covers 191 enterprises such as power generation, manufacturing, aviation, port and commercial buildings, and is supervised by Shanghai development and Reform Commission. The CO2 emission limit in 2013 was 160 million tons. The first transaction was completed on November 26, with the transaction price of 27 yuan per ton. The quota for the enterprise from 2013 to 2015 is based on the emissions from 2009 to 2011. Only spot trading is allowed at present, but since the enterprises have received the quotas of 2014 and 2015, the quotas for both years can be traded now.
Shenzhen: the mechanism was established in june2013, covering 635 enterprises and 200 public buildings covering all economic sectors. Unlike other mechanisms that set emission caps, Shenzhen mechanism is based on efficiency. The amount of free received by enterprises is determined by the estimated economic output of the year. If the government set benchmarks are not met, emissions permits must be purchased on the market. The total annual emission of participating enterprises is about 31million tons, which is the lowest among all pilot mechanisms in China. The government issued a quota of "about 100 million tons" from 2013 to 2015. The initial price of the transaction is about 30 yuan per ton, and then it rises to the high of 130 yuan, and the current price is about 70 yuan. The volume of trading is not large（ Global Times)