It is also obvious that the scheme as it stands won’t contribute to global emissions reduction given that China, having already quadrupled its coal-fired power generation capacity so far this century, has more new capacity under construction or planned than the entire generation capacity of the United States.

It will only be if and when there is some form of reducing caps on emissions and tougher allocations of permits that the scheme will start to impact China’s emissions materially.

To be fair, however, Europe’s ETS initially suffered similar over-supply of permits and large sectors of the European Union economies were excluded from its scheme or given free permits until the EU removed a swathe of the permits in circulation bout five years ago. The EU’s recent announcement of its new plan to reduce its emissions by at least 55 per cent below 1990 levels by 2030 represents the next, very aggressive, phase in its efforts to respond to climate change.

There is, therefore, a natural learning curve and years of expanding trials for regulators and participants in establishing an ETS and the massive and complex database needed for one to function effectively.

Whether China’s market is more than a gesture to global sensitivities will hinge on what it does in future.

President Xi Jinping has committed China to peak emissions by 2030 and carbon neutrality by 2060, with the level of that peak left undefined but potentially substantially greater than its emissions today given that coal will provide more than half China’s growing electricity requirements for a long time to come.

China is still building a raft of new coal-fired generators, albeit far more efficient ones, while most of the developed world is moving to exit fossil fuel powered generation.

It is also obvious that the scheme as it stands won’t contribute to global emissions reduction given that China, having already quadrupled its coal-fired power generation capacity so far this century, has more new capacity under construction or planned than the entire generation capacity of the United States.

While China is nearing the point where it would be classified as a developed economy (the bar is set quite low) it is clearly trying to balance its ambitions for economic growth and social stability (read the Communist Party’s continuing dominance) with a recognition that its trade and other relationships with the rest of the world depend on it taking some action to reduce its emissions given that it now produces more greenhouse gases than the developed world economies combined.

The new ETS should at least provide a foundation and a framework for a more impactful schemed in future as more sectors are included and the authorities eventually impose either an overall cap on emissions or individual caps on its companies’ emissions, or both.

The first day’s trading in the new market saw modest volumes – about 4.1 million tonnes were traded, with turnover valued at about $6.7 million – but Citigroup has forecast that the market could have turnover of about $US25 billion ($34 billion ) by the end of the decade as its coverage expands and the cost of emissions increases.

An intriguing issue, of great import to China’s leaders, is what putting a credible price on emissions might do to China’s economy and its competitiveness.

While having an ETS might avert potentially unpleasant measures from countries that do price carbon – the EU’s proposed carbon border tax is an example – it would raise the costs of emissions-intensive sectors and make them less competitive with developing economies that are less constrained.

A realisation that, as living standards improved and the size of China’s economy means the concessions the developed world makes towards developing economies will be threatened, probably means there is a sense of inevitability to a reduction in its emissions in the longer term, which implies a major remaking of its industrial base and economic strategies.

In its “Made in China 2025” national strategic plan (a plan continuously updated and one whose title was quietly dropped because of the backlash to China’s ambitions it provoked elsewhere) China outlined a vision of a high-tech future and massive government funding and other assistance to reach it.

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Aerospace, biotech, smart manufacturing, robotics, artificial intelligence, electric vehicles and the other industries it wants to dominate in future aren’t emissions-intensive.

If that high-tech future is to be realised the most polluting industries will have diminishing importance and the new market for trading domestic emissions will, despite the low-key nature of its launch, have to play an increasingly important role.

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