China to Start Pollution-Trading System to Cut Emissions

China will start a national pollution-trading system to cut global warming emissions and make a substantial financial commitment to help poorer countries move away from fossil fuels, two U.S. officials said.

In a joint announcement with the U.S., China also will outline changes intended to favor electricity produced domestically by sources that will pollute less, the officials told reporters on a conference call Thursday.

Details will be released on Friday when President Barack Obama hosts Chinese President Xi Jinping for a state visit at the White House, the officials said. The two leaders, who were having a private dinner near the White House Thursday night, are scheduled to hold a news conference mid-day. Leaders of the two largest economies are using the announcement as a way to prod talks on a global agreement to stem climate change.

The measures are a follow-up to last year’s announcement when Obama and Xi met in Beijing that China and the U.S., the world’s No. 1 and 2 greenhouse polluters, jointly promised to limit their emissions.

That agreement injected new life into United Nations- sponsored climate talks. Those negotiations are barreling toward a conclusion in Paris in December, where envoys from more than 190 countries are expected to sign a final deal.

Pilot Programs

China’s emissions trading system would expand on seven pilot programs already running around the country. The national market would open in 2017 and would cover industries including power generation and iron, steel and cement makers, according to the two officials. They briefed reporters on condition of anonymity to discuss the announcement before it’s publicly released.

Such systems typically put a cap on total emissions and then allow factories, power stations and other sources to buy and sell pollution credits. Proponents say the market encourages innovation and lowers the cost of pollution cuts.

The officials declined to specify how much climate aid China will provide to other countries, saying that would be announced tomorrow. Obama last year pledged $3 billion in U.S. support for a UN-organized Green Climate Fund. The money has been a key demand of developing nations who say they can’t agree to avoid cheaper but more polluting fossil fuels without financing from richer nations.

In their joint announcement last December, the U.S. promised to cut greenhouse pollution by more than a quarter over the next decade. China pledged its emissions would reach a peak by about 2030 and to boost its use of renewable energy.