News in the Financial Times of the Tianjin Climate Exchange preparing to launch China’s first domestic carbon market is further evidence for the growing support for carbon markets as a tool in preventing dangerous green house gas emissions entering the atmosphere.

The Tianjun Climate Exchange is a joint venture between the Chicago Climate Exchange, the municipal government of Tianjin, and PetroChina. The system will set an emissions cap for participating instillations, with those exceeding their allowance having to buy additional allowances from other companies who have emitted less than their allocation. With no clear legal or policy framework set out by Beijing, any such scheme would be on a purely voluntary basis. It is rumoured that such a cap and trade system could be in place in as little as six to twelve months.

This move signals a shift in the global strategy to address emissions targets. No longer are carbon markets the preserve of developed nations; the political will and momentum behind markets seems to have gathered pace. Where the controversy behind the benefits of carbon markets seems ever present in Europe, developing countries are taking steps to implement their own version of systems that would help them reduce emissions.

Many questions remain regarding what a Chinese carbon market might look like. Would they be able to draw from lessons learnt by the UK during its voluntary emissions trading scheme or will they look to the EU’s emission trading system? As a starting point those at Tianjin Climate Exchange might get some good pointers from Sandbag's recent report on lessons learned from the EU emissions trading system. The important issue is whether this could lead the the way for a national voluntary carbon market, or even a compliance market. The development of a domestic Chinese carbon market could provide the well-needed boost the carbon market needs.