THE country’s top economic planning agency has released basic rules for a nationwide emissions trading scheme that is expected to be launched in 2016.

    The regulations published by the National Development and Reform Commission (NDRC) make formal China’s plans to launch an emissions trading scheme, set to be the world’s biggest.

    China, the world’s largest emitter of climate-changing greenhouse gases, aims to use the market as a key tool to halt the growth of its emissions by the end of next decade.

    The final version of the scheme rules omitted specifics about the level of penalty that will be handed out to companies missing their targets under the program.

    An October draft had proposed a fine of 300 yuan (US$48.50) for each ton of carbon dioxide (CO2) emitters fail to surrender permits for.

    But observers warned against reading too much into the omission.

    “This regulation is very general. There will be more detailed rules released later,” said Wang Yao, director of the Research Center for Climate and Energy Finance at the Central University of Finance and Economics.

    According to the rules, which will come into effect in January, the NDRC will draw up limits on CO2 emissions for China as a whole, as well as for each individual province, although these will need approval from the State Council.

    It will also decide which sectors of the economy will be given emission caps, though non-covered firms will be allowed to participate in trading.

    Provincial officials will be allowed to make the scheme more ambitious in their region, either by bringing more sectors into it or reducing the amount of available permits, but they will not be allowed to water it down.

    Companies brought into the scheme will have to hand over one permit or offset credit to the government for each ton of CO2 they emit. Initially, most permits will be given to companies for free, but as time passes, the NDRC will charge for an increasing share of them.

    Government officials have hinted that only some provinces or sectors will be included from the outset, before the scheme gradually expands to cover all of China by 2020.

    Over the past 18 months, China has launched seven pilot carbon markets, including one in Shenzhen, in a bid to gain valuable experience before the national scheme begins.

    (SD-Agencies)