BlueNext partnership paves way for China carbon trading push

BlueNext, Europe's largest carbon credit exchange, announced yesterday that it is to partner with China Beijing Environmental Exchange (CBEE) in a move that could result in a new trading platform for Chinese carbon credits.

The two exchanges have signed a memorandum of understanding that will see them investigate the potential for a China-based carbon market. BlueNext hopes that the alliance will lead to a joint venture that would operate a new carbon exchange in China.

The CBEE was established last year to develop a platform to trade emission quotas. However, it has not yet commenced trading operations.

Serge Harry, chief executive of Paris-based BlueNext, said the agreement provided a potential stepping stone into the wider Asia market.

Overseas carbon exchanges have been eyeing China for some time in the hope that the government of the world's largest emitter of greenhouse gases will sanction emissions trading markets in the next few years. China currently lacks a legal framework for such trades, but has launched a number of small-scale regional carbon trading trials.

Last year, the Chicago Climate Exchange partnered with China National Petroleum Corp, the country's largest oil and gas producer, to set up the Tianjin Climate Exchange. Similar to the CBEE, it is intended to provide a platform for carbon credit trading but is not yet operational.

Investors in pollution-reduction projects in China are able to create credits through the UN-backed Clean Development Mechanism. However, the credits cannot be traded domestically, and are instead sold to businesses and governments in other countries.