China needs to set absolute restrictions on greenhouse gas emissions if it is to fulfil its aim to set up a carbon market over the next five years, a cabinet office think tank said in a paper published on Thursday, Reuters reported.

"It is only under an absolute emissions cap that carbon emission permits will become a scarce resource and possess the qualities of a commodity," the State Council's Development and Research Centre said in a paper in Seeking Truth.

Beijing has pledged to reduce 2005 levels of carbon intensity -- the amount of CO2 produced per unit of GDP growth -- by 40-45 percent by 2020, but that is unlikely to be enough to kickstart a market, the researchers said.

"China's carbon emission intensity target is a relative amount and it must be converted to an absolute amount," they said.

They said that absolute caps could be calculated on the basis of existing intensity targets, and allocated to provinces and enterprises.   

In recent months, government officials have said that China is drawing up plans to impose carbon emission caps in a number of pilot provinces and sectors.  

An absolute energy consumption cap of 4.1 billion tons is expected to be included in a new "low-carbon five-year plan" when it is published later this year.