China is planning to use a pilot programme for energy trading between companies next year as it seeks to curb carbon emissions by forcing companies to use energy more efficiently.
The pilot programme will allocate energy consumption quotas to companies, who will have to pay if they exceed the limit. It will be introduced in four provinces initially: Zhejiang, Fujian, Henan and Sichuan, and pending a review in 2020 then be rolled out nationally.
In a statement released yesterday, the National Development and Reform Commission (NRDC) also said the government aims to cap national energy consumption at five billion tonnes of standard coal equivalent by 2020.
Money paid by companies for exceeding quota limits in the pilot programme will be used to tackle emissions in their local areas, the Chinese government said. Renewable energy used by a company for its own operations will not be counted in the energy cap, it added.
The quotas will be handed out for free to each company, and firms are free to sell on surplus allowances at a profit during the same year.
The energy trading programme is set to be introduced in the same year as China is expected to launch its long-awaited cap-and-trade programme for emissions.
The Chinese system is expected to create the world's largest national carbon market, imposing carbon prices on the country's giant industrial sector in a bid to incentivise firms to step up investment in emissions reduction measures.
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