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China to launch carbon trading system in 2016

China will launch what will be the largest carbon dioxide emissions trading system in the world in 2016, a government official said.

The government is close to finalizing the rules for the system, Reuters reported Sunday.

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China is the world’s largest emitter, with about 30 percent of the world’s carbon pollution. It has pledged to reduce its carbon emissions as a factor of gross domestic product by 40 to 45 percent from 2005 levels by 2020.

“We will send over the national market regulations to the State Council for approval by the end of the year,” Sun Cuihua, a senior official with the National Development and Reform Commission, said in Beijing on Sunday, according to Reuters.

Some provinces will be allowed to delay the 2016 implementation if they’re not ready.

Europe currently has the largest carbon trading system. In the Asia-Pacific region, Kazakhstan and New Zealand have similar systems, South Korea is launching one next year and Indonesia, Thailand and Vietnam are considering them.

Like other carbon trading systems, carbon dioxide emitters like power plants and manufacturers will have limits on the amount they can emit, and have to pay to emit more. Credits for emissions could be bought and sold.

China tested carbon trading last year in five markets and saw a high amount of compliance, Reuters said.