Hubei plans province’s first carbon auction next month

Hubei province will auction up to two million carbon permits at a government-set minimum price next month to kick-start the nation’s sixth pilot emissions trading scheme (ETS).

Hubei’s carbon market will be only the second to sell a share of the permits. In most of the other trial schemes, the permits have been handed out for free.

China, the world’s top emitter of greenhouse gases, is seeking to limit its impact on climate change, and successfully operating the schemes is seen as vital for the foundation of a national emissions market.

Under China’s schemes, hundreds of power generators and manufacturers must buy permits if they emit climate-changing gases above a certain allocated quota.

The Hubei scheme will cap emissions from 138 power generators and manufacturers at around 300 million tonnes of carbon dioxide a year, making it China’s second largest market after Guangdong in terms of emissions covered.

“We will arrange the first round of auctions ahead of the market launch in March. We are thinking about setting the available amount at one to two million,” Wang Hai, vice general manager of the China Hubei Emission Exchange, said.