BEIJING, June 5 (Reuters) - The southwestern city of Chongqing will be the seventh region in China to launch carbon trading when its market opens on June 13, the local carbon exchange said Thursday, in a move designed to curb the city’s greenhouse gas emissions.
The market is the last of China’s planned pilot CO2 markets ahead of the launch of a nationwide scheme later this decade as the world’s biggest-emitting nation steps up efforts to slow down rapid emissions growth.
A launch date for the market has been set for Friday next week, Cao Zhu, a manager with the Chongqing Carbon Trade Centre, which will host trading under the scheme, told Reuters.
“We are testing the market by asking for initial bids around 30 yuan ($4.80),” Cao said.
In the other six markets, a number of pre-arranged trades have been announced at price levels with strong government backing, ranging from 21 yuan in Hebei province to 60 yuan in Guangdong.
Market participants say the big difference in local prices does not represent the cost of cutting emissions or reflect the demand and supply balance in the market.
Instead, they mirror political preferences of local governments and their willingness to allow speculative traders to join the market, which will often cause bigger price swings.
Even though companies will only get access to their permits and trading accounts now, the decision to launch the scheme was made in 2011, and the cap on emissions will be backdated to Jan. 1, 2013, according to a local government website.
The scheme will cap greenhouse gas emissions from 242 firms across all sectors of the economy that have emitted at least 20,000 tonnes of CO2 equivalent per year since 2008.
The government has issued a total of 125 million permits for the year 2013, and has said that while all permits will be handed out for free, the total amount will be reduced by 4.13 percent per year.
Given the late start of the scheme, firms have been given until June 2015 to comply with their targets for 2013 and 2014.
Chongqing, whose economy grew 12.3 percent to $203 billion in 2013, is a major manufacturing hub of vehicles and consumer goods.
Sun Cuihua, a senior climate official at the National Development and Reform Commission (NDRC), said earlier this week that the central government aims to begin pilot trading in a national emissions market in 2016 or 2017, making it fully operational in 2020. (Editing by Muralikumar Anantharaman)