China is set to pilot an emissions trading scheme before 2015 after a decision at a high-level meeting between government and industry, according to local media.

A closed meeting chaired by Xie Zhenhua, deputy director of the National Development and Reform Commission (NDRC), and involving officials from a range of government ministries as well as industry, policy experts and environmental exchange representatives agreed the initiative in principle, the China Daily reports a source from within the meeting saying today.

A domestic carbon trading programme would be piloted during the next five-year plan running from 2011 to 2015, due to be finalised in the next few months. Issues to be decided include which emitting sectors or geographical areas are to be covered in any pilot emissions scheme.

"The consensus that a domestic carbon-trading scheme is essential was reached, but a debate is still ongoing among experts and industries regarding what approach should be adopted," the source told the newspaper. The meeting is said to have concluded that any trading scheme be a unilateral domestic decision and not be tied to any international climate negotiations.

On the same basis, China has set itself targets to reduce the greenhouse intensity of its economy by 20 per cent from 2005 levels by 2010, largely achieved, and 40 to 45 per cent by 2020. These are not absolute reduction targets such as those for developing countries under the Kyoto Protocol, but proportional ones to reduce the level of emissions per unit of GDP. As such, carbon emissions can still rise overall during the target period.

The move toward a market based carbon pricing scheme in China is a major departure from current efforts to cut emissions and raise energy efficiency by command and control measures imposed and negotiated by central and regional government.

Tang Renhu, from the low-carbon centre at China Datang Corporation, apparently also privy to the meeting’s decisions, told the China Daily there was a realisation that administrative measures alone could not cost-effectively see future energy targets met.

If the reports are accurate and China is move towards a national emissions trading scheme in the near term, this would produce a stark contrast with the failures of the United States and Australia, developed and democratic nations that have seen efforts so far fail to put in place such a carbon pricing regime – seen as fundamental to any economy’s effort to tackle greenhouse emissions and switch to a low-carbon energy footing.

Earlier this week, China rejected claims in a report by the International Energy Agency that the country had surpassed the US as the world’s largest energy user.