File photo: Shanghai carbon-market emissions trading scheme pilot launches trial at the Shanghai Environment and Energy Exchange on November 26, 2013. Around 191 companies from industries including steel, chemical production, service and aviation took part in the trials between 2013 to 2015. Photo: Xinhua

Preparations for China's carbon emissions market have been completed, and online trading will start at an appropriate time this month, an insider familiar with the official plan told the Global Times on Thursday. 

The exact date will be announced later, according to the insider who spoke on the condition of anonymity. The Ministry of Ecology and Environment, which is in charge of relevant work for the market, has not announced a date for the launch yet.

Once launched, the market would help enterprises cut emissions while reducing costs, and it would help China realize its pledge to reach a carbon emissions peak in 2030 and become carbon neutral in 2060, analysts noted.

"The carbon trading market is just one of the measures to reduce carbon emissions. It currently only covers the power sector, equivalent to about 4 billion tons of carbon dioxide (CO2) emissions, which should be cut to zero within 40 years under carbon neutral planning," Wang Jun, director of carbon asset management of Sichuan Yongxiang Co, told the Global Times on Thursday.

According to the overall design of the carbon market, there are eight high-energy industries: electric power, petrochemicals, chemicals, building materials, steel, non-ferrous metals, papermaking and civil aviation.

These energy-intensive industries will face increasingly urgent emissions reduction pressure, which will promote the optimization of the overall energy structure and green technological transformation in related fields, said observers.

For instance, the rising market share of new-energy vehicles in China signals an industry transformation - from fossil-fueled to clean energy-fueled.

After the launch of the national carbon emissions trading market and with the gradual expansion of the coverage of industries and carbon reduction pledges, China's carbon price will rise sharply, and the market turnover will exceed 2 trillion yuan ($308.2 billion) before 2030, said Wu Qi, executive dean of the Wuxi Institute of Digital Economy.

China has pledged to cut carbon dioxide emissions per unit of GDP by more than 65 percent from 2005 levels by 2030. According to estimates, China's peak CO2 emissions are about 12 billion tons.

China has pledged to cut carbon dioxide emissions per unit of GDP by more than 65 percent from 2005 levels by 2030. According to estimates, China's peak CO2 emissions are about 12 billion tons.

"The market is waiting to see what happens. Apart from trading, we should also have a monitoring mechanism and a verification mechanism to check whether enterprises have achieved their emissions reduction targets," Han Xiaoping, chief analyst at energy industry website china5e.com, told the Global Times on Thursday.

Since there will be transactions that require the participation of financial institutions, there may also be speculation, which needs to be prevented, said Han.

China's top economic planner has authorized seven cities and provinces to begin trials of carbon trading in October 2011.

As of August 2020, the pilot carbon markets have covered more than 20 industries, such as steel, electric power and cement, involving nearly 3,000 enterprises, with a cumulative turnover of more than 400 million tons of CO2 and 9 billion yuan.

"I don't think China is at the beginning stage of carbon trading. It has been 10 years since China started its carbon market pilot program, and a lot of experience has been accumulated in terms of quotas and the implementation of treaties," an analyst of green finance and low-carbon economy surnamed Xu told the Global Times on Thursday.

The main trading mechanisms in China's carbon market include local quotas and Chinese certified emission reductions.

But industry insiders also pointed to problems such as low trading volumes. The liquidity of China's carbon trading market needs to be improved.

"The national carbon trading market included only 2,000 power companies initially. In the future, industries with greenhouse gas emissions reaching 26,000 tons per year can be included in the market, which will indicate a low initial participation level with certain entry threshold restrictions," said Zhao Yue, a research fellow on carbon neutrality.