China will launch a national emissions trading scheme later this year, with measures expected to be roughly double those currently implemented in Europe, according to the Australian Financial Review.
According to reports, the ETS will first target the coal sector, before moving on to the steel and aluminium sectors by 2020.
A representative from Tsinghua University, who reportedly advises the Chinese Government, told AFR the much-talked-about scheme would come into force by the end of this year.
“It is still uncertain how many sectors will be covered in the early stages but power generation will definitely be covered,” the source was quoted as saying.
The scheme would reportedly work by charging coal burning entities when they go over the carbon cap, allowing companies under the cap to sell credits to those who breach it.
The precise mechanisms of an ETS have been debated around the globe, and the scheme’s overall impact on coal prices and demand is yet to be seen.
One expert who believes the ETS will impact Australian exporters is Carbon Market Institute chief executive Peter Castellas.
“Our energy-intensive exports sit directly in the supply chain of the world’s largest carbon market, where their customers are going to have a liability around the carbon price,” Castellas reportedly told The Guardian.
“That will send a market signal of real significance.”