Speaking this week at the Australia-China Ministerial Dialogue on Climate Change in Sydney, Australia's Minister for Climate Change Greg Combet said, "Australia has been working very closely with China on the development of its pilot and national emissions trading schemes over the past two years."
China intends to launch pilot carbon markets in five cities and two major provinces, with the first scheduled to begin next month in Beijing. China's scheme will apply to companies emitting at least 10,000 tons of carbon annually.
"Without China, we cannot solve climate change," Combet said in a report by Xinhua, China's official news agency. "This plan is serious, comprehensive and ambitious but also realistic about the challenges ahead. It covers every issue, from setting caps and measuring emissions, to setting up the legal and financial framework that will underpin the scheme."
China is the world's top emitter of carbon while Australia is one of the largest per capita carbon emitters among developed nations.
Under Australia's carbon tax, which went into effect last July, businesses that emit 25,000 tons of carbon dioxide or the equivalent in other greenhouse gases are charged $24 per ton. In 2015 it converts to an emissions trading scheme with a floating price starting at a floor of $15.
China's pilot schemes on their own are expected to represent the world's second largest emissions trading market, bigger than the schemes in California, Australia and New Zealand combined.
Combet said that China's national carbon market plans "will be a very important development for the global carbon market."
"In the future, we would like to work toward the development of an Asia-Pacific carbon market including major emerging economies like China and South Korea," he said.
China's openness to the possibility of linking with other emissions trading schemes around the world, Combet said, "is further evidence of growing international cooperation on climate change."
China has pledged to reduce its carbon emissions per unit of gross domestic product 17 percent from 2010 levels by 2015 and 40-45 percent below 2005 levels by 2020.
"China is now poised to become one of the world's largest jurisdictions with carbon pricing in place. Successful development of a national scheme from their seven pilots can play a vital role in China's, and hence the world's, efforts to slow global warming and its impacts," said Iain McGill, joint director of the University of New South Wales' Centre for Energy and Environmental Markets, in a statement.