Guangdong will auction off 1 million permits at a minimum price of 35 yuan ($5.62) each on Mar. 27, the China Emissions Exchange in Guangzhou announced Wednesday, the third of four planned auctions for the 2014 emissions year.

The government aims to sell 8 million permits overall for the year to emitters in the biggest of China’s seven pilot markets. In the first two auctions, 1.7 million were sold.

The minimum price is steadily rising from 25 yuan in the first auction to 40 yuan in the fourth.

But there is doubt as to the demand at the upcoming auction, given that prices in the secondary market linger around 20 yuan amid weak demand, the lowest in China. Spot permits closed at 20.20 yuan on Wednesday.

The government will put 80% of the revenue in a $96 million carbon fund, expected to be launched during the first half of 2015.

Elsewhere in China, prices in Shanghai remained unchanged at 25.40 yuan on Wednesday, their lowest level since the market opened in November 2013. Some 11,000 permits changed hands.

By Stian Reklev – stian@carbon-pulse.com