China plans to roll out its national market for carbon permit trading in 2016, an official said Sunday, adding that the government is close to finalising rules for what will be the world's biggest emissions trading scheme.
The world's biggest-emitting nation, accounting for nearly 30 percent of global greenhouse gas emissions, plans to use the market to slow its rapid growth in climate-changing emissions.
China has pledged to reduce the amount of carbon it emits per unit of GDP to 40-45 percent below 2005 levels by 2020.
It has already launched seven regional pilot markets in a bid to gain experience ahead of a nationwide scheme.
"We will send over the national market regulations to the State Council for approval by the end of the year," Sun Cuihua, a senior climate official with the National Development and Reform Commission (NDRC), told a conference in Beijing on Sunday.
The national market will start in 2016, although some provinces would be allowed to start later if they lacked the technical infrastructure to participate from the outset, she said.
The Chinese market, when fully functional, would dwarf the European emissions trading system, which is currently the world's biggest.
It would be the main carbon trading hub in Asia and the Pacific, where Kazakhstan and New Zealand already operate similar markets. South Korea will launch a national scheme on Jan. 1, 2015, while Indonesia, Thailand and Vietnam are drawing up plans for markets of their own.
The Chinese market will cap carbon dioxide emissions from sources such as electricity generators and manufacturers. Those that emit above their cap must buy permits in the market.
Five pilot markets that opened in China last year saw a high degree of compliance by included emitters in their first year, although data secrecy and a tendency to hand out too many permits made them inefficient in cutting emissions.
The pilot schemes are keen to attract professional trading companies to boost liquidity, and Shenzhen - the smallest of the pilots - recently allowed trades to be settled in foreign currencies in a bid to make trading easier for foreign traders.
(Editing by Simon Cameron-Moore)