China mulls national pollution permit trading system

China will look into establishing a nation-wide trading system for pollution permits as part of efforts to use market mechanisms to help clean up its environment, the country's top environment official said.

In remarks published on the website of the Ministry of Environmental Protection (www.mep.gov.cn) on Friday, minister Zhou Shengxian said China was working on new regulations for pollution permits and would also publish proposals for new pilot trading projects as soon as possible.

A woman wearing a mask rides her bicycle along a street on a hazy morning in Beijing, February 28, 2013. [Reuters/China Daily]

China has vowed to reverse the environmental consequences of three decades of breakneck industrial expansion and clean up its heavily polluted air, water and soil and is hoping to use the market to encourage firms to cut emissions.

Provinces pledged this week to meet targets set by the ministry to cut air pollution by 5 to 25 percent. The ministry said it was considering a system to evaluate progress.

Authorities regularly issue directives to try to tackle air pollution in major cities, but the effect has been limited with enforcement still lax and economic growth seen as the priority.

China already has more than 20 local trading platforms that allow industrial firms to buy and sell permits for pollutants like sulphur dioxide and nitrogen oxides, major constituents of smog and acid rain. But their impact has been limited, said Ma Zhong, the dean of the School of Environment and Natural Resources at Renmin University.

"Emission trading in China is not strictly a market activity and it is more like paying for emitting. It is just a few regions running some test trading," he told Reuters.

Five cities and regions set up new pilot carbon trading platforms last year to encourage local enterprises to address soaring greenhouse gas emissions and two more will be launched in 2014. China aims to have a nationwide carbon emissions trading system later in the decade.

On Friday, the seven pilot carbon trading platforms signed an agreement with other environmental exchanges to look into trading not only carbon credits but also pollution, water and energy use permits.

Environment minister Zhou said China planned to cut major pollutants like sulphur dioxide and ammonium nitrate by 2 percent over 2014. Nitrogen oxides would be slashed by 5 percent.

China said late last year that it was struggling to meet environmental targets for the 2011-2015 period, with energy and carbon intensity targets still behind schedule.

Nitrogen oxide emissions, expected to fall 10 percent over the 2011-2015 period, actually rose 2.82 percent by the end of 2012. Zhou said the total amount was expected to have fallen by more than 3.5 percent last year.