Chongqing has cut the number of issued CO2 permits for 2014 under its carbon market by nearly 8.4 million to 106.3 million after assessing scheme participants’ verified emissions reports, it said.

The municipal Development and Reform Commission in March pre-allocated 115.7 million permits, but has reduced the number ahead of the June 23 compliance deadline day, the agency said in a statement.

The amount of permits was cut after the government assessed third-party audited reports of total emissions, but it was not immediately clear whether the permits were taken from companies that had been over-allocated, or from facilities that had shut down or fallen below the scheme threshold.

Several of China’s pilot markets are subject to a final adjustment to the number of permits after emissions are verified as government wish to avoid an unnecessary surplus, for example big sell-offs by companies that don’t need their permits because they have shut down their production facilities.

However, traders say it makes it difficult for companies to calculate their market position accurately until just ahead of compliance.

The Chongqing ETS launched in June last year, but CO2 caps were backdated to Jan. 1, 2013, so emitters must later this month surrender permits for two full years.

Local emitters have not showed much interest in the scheme. A handful of trades went through on the opening day, but since then only a single transaction has been registered on the local carbon exchange.

By Stian Reklev – stian@carbon-pulse.com