Climate change officials from Shenzhen will help the government of Baotou design an emissions trading scheme in Inner Mongolia’s biggest industrial hub with a view to linking the two regional Chinese markets in the future, the Shenzhen Emissions Exchange said Thursday.

Baotou, a city of 2.7 million inhabitants, accounts for more than a fifth of Inner Mongolia’s GDP, mostly due to its huge rare earth production, which has also turned it into one of China’s most polluted cities.

It was last year earmarked by the provincial government as a carbon market pilot region, and the municipal government announced earlier this year it would set up an emissions trading scheme, although no details have emerged on when the market would open.

But on Wednesday, the Baotou DRC held a ceremony to mark the launch of the ETS design process where it revealed it would be guided by officials from the southern city of Shenzhen, the Shenzhen Emissions Exchange said.

The two markets will aim to link up with each other at some stage, it said, although there was no information on how and when this might happen.

The deal extends Shenzhen’s carbon cooperation with Inner Mongolia. Earlier this year the two signed an agreement that made Inner Mongolia one of 16 provinces eligible to supply offsets to emitters in the Shenzhen ETS.

But the announcement creates some confusion as to how Baotou will have time to design and launch a local market before the national emissions trading scheme opens in late 2016 or early 2017.

Central government officials have indicated they want to set up a unified market from the beginning, although NDRC officials have privately said they are supportive of new local ETS initiatives before national rules are set.

In a survey published by China Carbon Forum earlier this week, only a third of those surveyed expected the government to set up a single, unified market from 2017, while a quarter thought China would just carry on with the existing pilots for the rest of the decade.

By Stian Reklev – stian@carbon-pulse.com

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