And the central government did express willingness to let the market play a role in its overall campaign of reducing energy consumption and greenhouse gas emissions.

A draft regulation on voluntary emissions trade was "almost ready" and will be issued "as soon as possible," said Wang Shu, official with the climate change department under the National Development and Reform Commission, also at the Tianjin event.

"The country will need the market mechanism to realize the emissions intensity cut of 40 to 45 percent from 2005 by 2020," Wang said. "We welcome and encourage some regions and sectors to start pilot projects of voluntary emissions trade if conditions allow."

Derwent added to this by saying that a province or city can act as an example to the whole country. "When there is uncertainty at the national level, ample history around the world shows that regions and cities can act on behalf of themselves."

Experts have also suggested a new way of allocating the 2020 emissions intensity cut quota, which will be a key benchmark for the emissions trade.

Zou Ji, China country director of the World Resources Institute, told Xinhua that China has allocated the targets of pollutant cuts based on administrative divisions but, if the emissions cut quota follows the same way, it would not be able to form an open national carbon trade market.

"If the quota is allocated among provinces, it is quite unlikely for any trade across the provinces," Zou said. "We can pick up some industries, such as power and petrochemical, and set up a carbon trade market in the sector as pilot projects. It will encourage these large emitters to adopt low-carbon technologies and apply carbon neutral strategies."

Gradually the practice can be applied to industries that are more locally based, such as housing and public transport, before a real national market is set up, he added.

"If the carbon market is not for tomorrow, it will be for the day after tomorrow. But if you don't spend today preparing for it, you could lose," Derwent said.

Business initiatives

Despite lingering doubts about the voluntary emissions trade, businesses have made moves to become more climate-aware.

China Vanke Co Ltd, a leading real estate developer, has bought emissions reduction quotas at the Shanghai Environment and Energy Exchange, to make its pavilion at the Shanghai Expo carbon neutral.

"We are willing to try the carbon trade as we believe being a low carbon emitter is the trend. If we start now, we will be rewarded in the future," said Wang Shi, chairman of China Vanke, at the Tianjin event.

In the past two years, the company has also followed a top "green building" standard, issued by the Ministry of Housing and Urban-Rural Development, which means the energy consumption of a building should be reduced by 65 percent from its 'normal' operating level. The standard is not mandatory.

This year, about 10 million square meters of Vanke buildings adopted the standard and by 2014 all their buildings will adopt the standard, Wang said.'"If the carbon market develops, we can sell the emissions cut quotas we gain through green buildings," he said.

(Xinhua News Agency October 9, 2010)