China will likely start carbon emissions trading in Beijing , Shanghai and Guangdong province by the end of this year, as part of efforts to control emissions and combat climate change, a senior planning official said Tuesday.

China also hopes that developed countries will provide funds to assist developing countries in their drive to reduce emissions, said Xie Zhenhua, vice chairman of the National Development and Reform Commission.

"The goal is to explore a carbon market that is in accordance with China 's national conditions by lowering total costs for emission cuts while achieving the targets," Mr. Xie told a news briefing.

"We still hope (developed nations) can confirm a timetable for providing money," he added, referring to pledges by developed nations to help developing countries in their efforts.

China launched in June a carbon-trading market in Shenzhen as part of a pilot program that initially called for seven trading centers. In addition to Shenzhen, the plan also included the cities of Beijing , Shanghai , Tianjin and Chongqing as well as the provinces of Guangdong and Hubei .

Carbon markets, also known as emissions trading or cap-and-trade schemes, are a widely adopted method of putting a price on carbon dioxide emissions produced by burning fossil fuels such as coal and gas.

Under the program, factories and other major carbon producers will have to curb pollution by capping the volume of emissions. Cleaner companies can then sell excess permits to dirtier ones, thus setting a market price aimed at reducing overall emissions and driving more investment in greener technologies.

So far the trading in Shenzhen has been less than anticipated but there is hope for an upturn in the future.

"The trading volume in Shenzhen so far has been limited, about 120,000 tons in total," Mr. Xie said, adding that the carbon market is still developing.

He conceded that enforcement of rules on controlling air pollution remains loose and this is hampering the nation's efforts in fighting climate change. The world's largest developing country still needs to balance competing objectives of economic development, raising living standards and protecting the environment, he said.
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