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China’s Power Sector Carbon Market Will Eventually Be World’s Largest

China is launching the world’s biggest carbon cap-and-trade market—and its plans are only getting started. But still missing is an actual date when the first carbon permit will change hands.

After much discussion and anticipation, unveiled a carbon permitting and trading market this week that covers emissions from some 1,700 large fossil-fired electricity generating plants. While the incipient market covers only that apparently narrow group, the power sector as a whole, heavily reliant on coal, accounts for nearly half of China’s total emissions. The new market will cover three-quarters of those, or nearly a third of the national total.

China burns more than half the coal consumed by humanity, the New York Times notes, pumping out more greenhouse gasses than North America and Europe put together. Even its partial carbon market will be much bigger than Europe’s emissions trading system, currently the world’s largest. And it is only part of what China’s government has planned.

After gaining experience with seven trial markets in sectors like regional cement factories, steel mills, and chemical complexes—which will remain in place for now—Beijing views the national power sector market as the first test of nation-wide permit trading markets that it plans to extend to seven more industries by 2020.

But while the government’s long-awaited “launch” included some additional details about the market’s coverage—it will apply to power plants emitting at least 26,000 tons of carbon a year—other regulations remain to be divulged. And Beijing continued to be vague on when trading would actually begin. Previously, it had indicated the market would be active by mid-2017.

The Times, however, cites Zou Ji, president of the China arm of the non-profit Energy Foundation, as suggesting “that China was likely to issue credits starting early next year in response to domestic political pressures,” implying that trading will also begin during 2018.

Even with its actual inauguration months away, however, China’s further step toward comprehensive carbon cap-and-trading won wide international applause.

“China’s move to create the world’s largest carbon market is yet another powerful sign that a global sustainability revolution is under way,” said Climate Reality Project founder and former U.S. vice president Al Gore.

“The world has never before seen a climate program on this scale,” said Environmental Defense Fund President Fred Krupp, whose organization has also engaged with China in developing its climate strategy. “This new carbon market will position China not only to achieve its Paris agreement pledge to peak carbon emissions by around 2030, but to take on a more ambitious target that puts China’s emissions on a downward trajectory well before then.”

“Chinese leaders,” Krupp added, “have drawn lessons from the experience of other countries, and they’re moving in a gradual and sure-footed way to make sure they get this right. I think that’s smart.”