Hong Kong planning carbon exchange

Hong Kong is set to become the latest financial centre to join the global carbon market, announcing plans to set up a carbon trading exchange by the year end.

The Hong Kong Stock Exchange has said a feasibility study into the viability of trading emission related products will be completed by early April, with a concrete plan in place by December.

The exchange is expected to tap into the expanding supply of Clean Development Mechanism (CDM) carbon emission credits coming from China, which provides over 60 per cent of the credits in the global scheme.

It is not the first time Hong Kong has talked of setting up a trading scheme however, with plans outlined in a similar agreement with China's Guangdong Province touted in 2006. The two governments pledged that by 2010 they would cut local emissions by 40 per cent and 20 per cent respectively, using 1997 as a base year.

In related news, the Tokyo Stock Exchange Group and the Tokyo Commodity Exchange reportedly agreed this week to jointly undertake a feasibility study into creating a domestic greenhouse gas emissions trading market.