New markets will soon open in China to trade carbon caps. (Photo: AP)

China has ordered five of its cities and two provinces to set caps on their greenhouse gas emissions, preparatory to the opening of local carbon markets.

Reuters reported that a notice from the National Development and Reform Commission requested the cities of Beijing, Tianjin, Shanghai, Chongqing and Shenzhen, along with the provinces of Hubei and Guangdong, to set “overall emissions control targets” and to submit proposals on how they plan to allocate the targets.

Those provinces and cities were also ordered to put together a dedicated fund that will support the project, and to create comprehensive implementation programs.

The country has committed itself to cut its carbon intensity–the quantity of CO2 produced per unit of economic growth–by 17% by 2015, and intends to do so through the use of “market mechanisms.” It further intends to reduce its 2005 levels of carbon intensity by 40–45% by 2020.

Guangdong, which is China’s biggest CO2-emitting province, has already created an implementation plan that has been approved by the State Council, the country’s Cabinet. The province has set a goal of increasing its use of nonfossil fuels to make up 20% of its overall energy consumption by 2015. It also intends to reduce its carbon intensity by 19.5%.

In addition to the seven official pilot projects, there are more than 100 entities in China that are attempting to establish their own regional CO2 emissions trading platforms. Among these are the coal-rich province of Shaanxi and the northeast port city of Dalian.