• The Shanghai government offers financial incentives to curb air pollution.

The Shanghai government offers financial incentives to curb air pollution. (Photo : www.likeourlinks.com)

An official of the National Development and Reform Commission (NDRC) has announced on June 17, Wednesday, that the nationwide carbon trading scheme is likely to be ready by the end of 2016 or early 2017, as the government aims to reach emissions peak by 2030 and make full use of market mechanisms to meet its targets.

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The country also intends to extend the coverage to other parts of the country by 2016, as seven regional pilot exchanges are already in operation, according to a report by Reuters.

"There is a lot of work to be done if we are to get the market running by 2016, and the launch date depends on the progress we make," Wang Shu, a climate change official with the NDRC, said during a conference in Beijing on June 15.

"I personally think it is more practical to set up the market in 2017, but the final say is up to the top authorities," Wang added.

Wang said that the nationwide scheme would be included in China's commitments that will be submitted to the United Nations before the end of this month, amid talks on a new global climate pact in Paris later this year.

Experts have expressed concerns that China is getting into carbon trading without laying the necessary legal and regulatory framework.

Wang Huitong, a researcher with the Central University of Finance and Economics, said during the conference in Beijing that the problem of permit oversupply must first be addressed by the government.

Though trading activity has been slow and companies covered by the scheme have little incentives to buy, the exchanges in Guangdong and Hubei provinces and municipalities such as Beijing, Tianjin and Shanghai, have been operating for at least a year.

During the first phase of trading, most permits were distributed for free since regulators were hesitant to impose too much burden on firms.

In addition, the decrease in industrial output due to economic slowdown has eased the pressure on companies to cut back their emissions, which left many with permit surplus.

Wang said that the launch of the new nationwide carbon scheme would depend on whether the government can assign new carbon targets on a national scale, as the pilot trading phase is about to end in June next year.