China’s Jiangsu province will launch an energy savings trading scheme in July that will be tied to the national ETS when it launches next year, according to the provincial government.

The province, home to some 80 million people, will set up a market for trading of energy savings certificates for the iron and steel, non-ferrous metals, building materials, petrochemicals and chemical sectors in July, according to a recent note published on the provincial government website.

Under the scheme, companies can earn certificates by efficiency improvements or shutting down outdated capacity, while demand will be generated by companies looking to build new facilities or expand existing ones.

The market will first be rolled out in Jiangsu’s five richest cities – Changzhou, Nanjing, Suzhou, Wuxi and Zhenjiang – and then expanded to cover the whole province.

From next year the scheme will be tied to China’s national carbon emissions trading market, the government said.

Jiangsu ETS participants that have a surplus of carbon permits after the annual compliance procedures will be allowed to convert those into energy savings certificates and sell them into the energy savings market.

In addition to covered entities, energy saving firms and service providers, financial institutions and individuals that meet certain criteria will be allowed to participate in the market.

The market will be administered by the Jiangsu Economic and Information Technology Commission.

By Stian Reklev – stian@carbon-pulse.com