Hubei province became the sixth region in China to introduce a local carbon market, after Beijing, Guangdong, Shanghai, Shenzhen and Tianjin, under the government’s ETS experiment started in June 2013.
Hubei’s local authorities on Wednesday formally launched the scheme imposing caps on GHG emissions from 140 energy and industrial emitters, Reuters reported. The news outlet refer to a document according to which the Hubei government issued 292.2 million permits to scheme participants for the first year, equal to 97 percent of their 2010 emissions. A further 7.8 million permits will be sold in government auctions, while 24 million have been set aside in reserves.
The first auction was held on Monday, when 2 million permits sold at 20 yuan each, the official minimum price. Hubei firms can use CERs offset credits to cover for up to 10 percent of their emissions, but are restricted to using credits from projects located in the province.
Companies that fail to comply with the scheme will be fined 150,000 yuan and given fewer free permits the following year, Reuters reports.
China has set a non-binding target to reduce carbon intensity by 40-45% below 2005 levels by 2020. In line with this target the 12th Five-Year-Plan set a 17% reduction target for carbon intensity between 2010 and 2015. In the same document the government announced intention to implement a nationwide ETS by 2015, but the exact launch date remains undefined due to technical and legislative challenges. According to analysts, it may begin in 2019 or 2020.