China picks five exchanges to host offset trading

China has appointed five exchanges to offer trade in carbon offset credits as several of the country’s biggest cities and provinces prepare to launch CO2 emissions markets.

The National Development and Reform Commission (NDRC) has authorised exchanges in Beijing, Guangzhou, Shanghai, Shenzhen and Tianjin to host offset trading as China’s domestic carbon market emerges, it said in a statement Friday.

China is in the process of regulating its exchange sector, hoping to limit the potential for fraud and reckless speculation on hundreds of newly opened platforms that offer trade in everything from energy commodities to art.

Over the past four years, nearly 200 environmental exchanges have been launched in the country, but the vast majority of these will not be allowed to operate in the seven pilot emission markets that will launch this year and next.

The offset credits will be generated by projects in China that reduce greenhouse gas emissions, and can be used by companies such as power generators and steel and cement manufacturers that emit more CO2 than the absolute limits set under the schemes.

Two of the seven regions that will host pilot emission markets - Chongqing and Hubei province - do not have any exchanges cleared for offset trading, as candidates have failed to meet government criteria.

However, a representative for the local exchange Hubei Carbon Trading Centre told Reuters Point Carbon he hopes to get a licence in the future.

The five exchanges approved by the NDRC were the Beijing Environment Exchange, the Guangzhou Carbon Emissions Exchange, the Shanghai Environment & Energy Exchange, the Shenzhen Emissions Exchange and the Tianjin Climate Exchange.

(Source: Thompson Reuters)