Top polluter China starts carbon trade

China launched trading in its national carbon market, though the world’s biggest emissions exchange won’t help the top polluting nation make fast cuts to its climate footprint.

Carbon allowances opened Friday at 48 yuan ($7.42) a metric ton and quickly hit a 10 per cent daily trading limit, according to people familiar with the details. A first transaction of 7.9 million yuan was made at 52.78 yuan a ton, CCTV reported.

That price is a fraction of the rate in the European Union, where carbon touched a record of ^58.64 ($69.22) on July 1, and reflects the limited initial scope of China’s system. China’s market so far covers only about 2,200 companies in the power sector and has been criticised over generous pollution allowances that may do little to force emitters to take action.

China National Petroleum, China Petroleum and Chemical, or and China Energy Investment, one of the world’s top coal producers, were among companies that took part in early trading, according to CCTV.

Europe’s carbon market has seen prices rise “to levels that will likely kill off coal for power generation and also challenge the economic viability of natural gas,” Henning Gloystein, an analyst at Eurasia Group, said in an email.

Modest prices in China “won’t immediately induce a drastic shift, but which will allow Chinese companies to get used to the market.”

President Xi Jinping wants China to peak its carbon emissions by 2030 and reach carbon neutrality by 2060.