China to launch world's second largest ETS

China is set to run a pilot program of what will become the world's second largest Emissions Trading Scheme.

The Climate Institute based in Australia said China is now moving from seven emissions trading pilot schemes to a scheme which is about twice the size of Australia’s scheme and about the second largest in the world.

“They are putting in place controls on emissions and they’re doing this amongst a range of other policies, not just because they’re concerned about the climate impacts but they also see the economic opportunities that this century will be one, which does benefit those that actually have cleaner energy sources," said Climate Institute CEO John Connor.

Connor said China’s move towards a pilot Emissions Trading Scheme was catalyzing change in other Asian countries.

“We’ve seen South Korea pass legislation for an emissions trading scheme and now Vietnam and Thailand are looking to do so,” he said. “I think what China does is already having some impact on its region and that will continue to be the case.”

An emissions trading scheme or cap-and-trade is a market-based approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants.

A governmental body sets a limit or cap on the amount of a pollutant that may be emitted. The limit or cap is allocated or sold to firms in the form of emissions permits that represent the right to emit or discharge a specific volume of the specified pollutant.

The world's largest emissions trading scheme is the European Union Emission Trading Scheme whose purpose is to avoid dangerous climate change by curtailing the emissions of greenhouse gases.

Connor noted China was now one of the biggest investors in clean energy and predicted that it would become a clean energy superpower.