Beijing, July 22: China will start carbon trading in domestic businesses during the next five-year plan beginning in 2011 with an aim to reduce carbon emission.
The decision was made at a closed-door meeting chaired by Xie Zhenhua, deputy director of the National Development and Reform Commission (NDRC), and attended by officials from related ministries, enterprises, environmental exchanges and think tanks, China Daily reported Wednesday quoting an unnamed participant.
"The consensus that a domestic carbon-trading scheme is essential was reached, but a debate is still ongoing among experts and industries regarding what approach should be adopted," the paper quoted the source as saying.
The meeting concluded that such efforts are self-imposed and should be strictly separated from ongoing international negotiations for a successor to the Kyoto Protocol to fight global warming, the source said.
Experts say, the carbon trading programmes aimed at shifting towards low-carbon economy by pushing the market to adopt energy efficient measures will help China meet its energy intensity target.
As a developing country, China does not shoulder legally binding responsibilities to reduce carbon emissions, according to the basic principle set by the United Nations Framework Convention on Climate Change.
However, putting a price on carbon is a crucial step for the country to employ the market to reduce its carbon emissions and genuinely shift to a low-carbon economy, industry analysts said.
China has mostly relied on administrative tools to meet its 20 percent energy intensity reduction target between 2006 to 2010. To that effect, the country's top 1,000 energy consumers have signed contracts with the central government to improve their energy efficiency.
But with rising energy demand, administrative measures are too expensive for the country to meet its future energy conservation targets - something that was also agreed at the meeting, said Tang Renhu from the low-carbon centre at China Datang Corporation who also joined the discussion.
Although China has refuted the International Energy Agency's label of being the world's top energy consumer, its energy consumption for 2009 stood at 2.132 billion tonnes of oil equivalent, according to the National Bureau of Statistics.
"The market-based carbon-trading schemes will be a cost-effective supplement to administrative means," said Yu Jie, an independent policy observer who previously worked for several international climate-related institutes.
Possible sectors for piloting carbon trade projects include carbon-intensive industries such as coal-fired power generation, Tang said.
China has pledged to cut its carbon emissions per unit of economic growth by 40 to 45 percent by 2020 from 2005 levels.