The Beijing municipal government on Tuesday announced that the city’s emissions trading scheme will continue after the June 30 compliance deadline, adding that it would propose to the central government a conversion mechanism that can allow unused allowances from China’s seven pilot schemes to be used in the national ETS.

Beijing now becomes the third of the seven Chinese pilot carbon markets after Guangdong and Shanghai to have confirmed trading will carry on in order to take into account the delay in plans to introduce a national scheme, which is now expected to launch in 2017.

The seven pilot markets were originally intended to run from 2013-2015 and be replaced by a national ETS in 2016, but all are expected to continue for an additional year since President Xi Jinping confirmed last September that the start of the national market would be pushed back to 2017.

The Beijing Development and Reform Commission said in its statement that it would propose a mechanism that would allow some or all unused allowances from the seven pilot markets to be brought into the national ETS.

The issue has for months been the subject of intense negotiations between the pilot market governments and the NDRC.

The central government is wary about allowing pilot allowances in the national market as it could make the scheme over-allocated from the beginning.

However, local DRCs are pushing back, worried that pilot market prices might drop towards zero if their amassed allowance surpluses cannot be transferred into the national ETS.

The lack of certainty around the issue is already weighing on prices, according to observers.

The Beijing government also said that the 600 new companies that will be included in the scheme for the first time this year must submit historical emissions by the end of this month in order for the DRC to decide on their allocation levels.

By Stian Reklev – stian@carbon-pulse.com

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