http://af.reuters.com/article/metalsNews/idAFL3E7J407J20110804

(Reuters) - China is considering plans to cap the greenhouse gas emissions of steel, cement and other industries, paving the way for carbon credit trading in the world's biggest emitter, a newspaper cited an official as saying on Thursday.

The comments from Sun Zhen, a climate official at the National Development and Reform Commission, add to recent signs that Beijing is seriously exploring absolute caps on some high polluting sectors, which would then allow businesses to trade on the right to emit carbon dioxide, the main greenhouse gas from burning fossil fuels and making cement.

China is the world's biggest emitter of the greenhouse gases from human activity. The cap-and-trade system would be part of the nation's goal to cut carbon intensity -- the amount of carbon dioxide pollution released for each unit of economic growth -- by 40-45 percent by 2020 compared with 2005 levels.

"Throughout the country, we have adopted a plan for reducing releases of carbon," Sun told the China Daily, the country's official English-language newspaper.

"But when it comes to actually reducing the emissions of certain businesses, that calls for limiting the absolute quantity of emissions," said Sun.

"Setting limits on the absolute amounts of carbon that can be emitted will make it possible to carry out trades of emissions credits," Sun said.

Sun did not indicate any time when such a scheme would be launched, but the report said it was likely to target steel and cement makers, and carbon credit trading could also take root in manufacturing hubs such as the Pearl River delta region near Hong Kong and the Yangtze River delta near Shanghai.

Other Chinese officials have recently floated similar ideas.

Xie Zhenhua, a vice minister at the National Development and Reform Commission who steers climate change policy, said last month that China will pilot a carbon trading scheme and gradually build a market for emissions trading.

An official from the NDRC said in April that China would pilot six emissions trading schemes by 2013, and set up a national trading platform by 2015.

Also, China is studying how industry-wide emission targets could be implemented in its electricity sector, which relies heavily on coal, the biggest source of carbon dioxide pollution that is intensifying global warming and threatening to dangerously disturb the climate.

China is anxious to use "market mechanisms" to avoid a repetition of last year, when a number of provinces were forced to shut down large swathes of industrial capacity as part of last-ditch efforts to meet 2006-2010 energy intensity targets.

It has already promised to improve monitoring over the next five years and has implemented an early warning system to prevent regions from falling behind on their targets.

A comprehensive "five-year plan" for reducing emissions over the 2011-2015 period has already been approved "in principle" by China's cabinet, the State Council, and is expected to be published later this year.

Scholars involved in drafting the plan have said it is expected to include an absolute energy consumption cap of 4.1 billion tonnes of standard coal by 2015.

China's high and fast-climbing output of CO2 from coal, oil and gas has put it in the centre of negotiations seeking a new global pact to deal with global warming.

China, with 1.34 billion people, already emits a quarter of the world's CO2, which is more than the United States, historically the world's top emitter.

China's carbon dioxide emissions rose 10.4 percent in 2010 compared with the previous year, climbing to 8.33 billion tonnes, according to estimates from BP .