September was a busy month for the Tianjin Climate Exchange, as it secured three deals including one offsetting the emmissions of a high-profile international forum recently held in the city.

The exchange has brokered a total of six carbon deals since its establishment in 2008.

"Compared with the first two years, we have seen big changes this year," said Mu Lingling, the exchange's vice president, at the sidelines of the fourth round of the ongoing United Nations climate talks from Oct 4 to 9.

As one of the country's three major carbon trading institutions and the first joint venture one in China, the exchange, owned by Chicago Climate Exchange and two Chinese partners, has felt pressure from operating in the new area of trade, she said. "We bear a heavy responsibility to explore the path for China's carbon trading market."

The country has played a big part in the Clean Development Mechanism (CDM) under the Kyoto Protocol. The Chinese government had approved 2,685 CDM projects by September and 953 of them were successfully registered at the UN CDM Executive Board, accounting for 40 percent of the total registered projects.

However, its voluntary emissions trade in the domestic market was new to both the government and investors.

"All three major climate exchanges in China are facing the same problem that we are trying to create a market out of nothing," said Jian Lin, chief executive officer of Shanghai Environment and Energy Exchange, in an interview with Xinhua.

The market does not have enough products and demand but, more importantly, the legislation, policy and methodology are not fully in place, he said.

"The market needs the participation of the government, enterprises, financial institutions and the public," Mu said.

The proper legislation is needed to define what exactly can be traded in China's carbon market and standards should be set to evaluate and identify the emissions reduction volume while the supervision and penalty system should be in place to sustain the market, she said.

"Carbon trade in China is not only about the exchanges. It is related to all sectors in the society," she said. "The market is like a newborn. Naturally it has some growing pains."

Henry Derwent, president and CEO of International Emissions Trading Association, was quite optimistic about the future of carbon market in China.

China like many other large countries outside the Kyoto targets, has made clear it has domestic targets though it does not have a binding target, he said.

"It is absolutely clear that the Chinese government is looking around for any policy, actions and mechanisms to achieve massive achievement in energy efficiency and carbon reduction."

"The carbon trade is to achieve a particular emission reduction objective at low cost. If China wants to make progress here, you need the industries and profit-motive working with you. To create business rather than a regulative environment has been recognized more and more among businesses, local and central governments."