China is going to launch its national emissions trading scheme (ETS), the so-called "national carbon market," in the second half of this year, which is seen as China's determination to carry on with green development.

China approved seven provinces and cities to conduct ETS in October 2011, including Beijing, Shanghai and Shenzhen. In addition to the global ETS and EU ETS, the establishment of China's ETS is expected to help effectively allocate resources and curb greenhouse gas emissions through market mechanisms.

To promote the establishment of China's national ETS is crucial for the country to cope with climate change. The "national carbon market" has total emissions of 4.5 billion tons, accounting for 50 percent of the carbon emissions from fossil fuel combustion. By opening this market, China means to effectively control the overall quantity of carbon emissions and promote the transformation of China's economy into a green and low-carbon model by boosting carbon productivity of high energy-consuming enterprises.

The seven pilot areas are still trying to find models and measures suitable to themselves. The difficulties and complexity facing China, a developing giant, in the process of establishing the world's biggest carbon market are huge, as there is no example to follow.

Some people see ETS as a shackle imposed on manufacturing industries and developing countries, as high-polluting and high energy-consuming manufacturing industries have to pay extra money for exceeding emission quotas. Most of these enterprises are based in developing countries like China.

China is trying to avoid mistakes committed by the EU ETS, which allocated bigger quotas than enterprises need, by carefully checking enterprises' carbon emission data.

(This is an edited excerpt of an article published in Oriental Outlook on July 20)