Shanghai carbon market cuts emissions 3.5%

The nearly 200 firms in Shanghai's emissions trading scheme cut their CO2 output by 5.3 million tonnes in 2013 compared with 2011, government officials said Monday, according to state-owned media.

The Shanghai scheme is one of seven pilot carbon markets launched in China as the federal government prepares a national market later in the decade to slow the rapid growth of greenhouse gas emissions.

The 3.5 per cent drop in CO2 came as a result of companies cleaning up production processes in order to meet targets under the scheme, local government officials told a conference in Shanghai, according to state-owned newspaper China Securities Journal, although the officials were not named.

The officials said the market had worked well in its first year, with 82 companies participating, although they called for strengthened abilities to open the market to private investors and greater powers to punish violators.

"Shanghai could take advantage of requests to boost joint efforts in tackling air pollution in the Yangtze River Delta, to facilitate the building of cross-regional trading in the area," said officials at the conference, briefed by the paper.

Five of China's regional carbon markets have recently completed compliance procedures for the first year of trading. Most scheme participants have met their targets, but little information is available on overall emission targets, meaning it is difficult to know whether emissions have gone up or down.