China Is Creating a Massive Carbon Market to Fight Climate Change

China, which more than a decade ago surpassed the U.S. as the world’s biggest polluter, is looking to financial markets to help restrain its greenhouse gas emissions. On Tuesday, China confirmed that it’s building what will become the biggest market for the carbon dioxide emissions that stem from burning fossil fuels. The program will force utilities to pay for at least some permits to release carbon dioxide, encouraging them to invest in equipment that will use fuel more efficiently and reduce pollution.

China’s participation in carbon trading would boost the portion of emissions covered by pricing worldwide to almost 25 percent. It creates a financial incentive for power companies in China to cut emissions and favor cleaner power generation. Pollution is still rising three decades after almost 200 nations led by the U.S. endorsed the United Nations Framework Convention on climate change, a treaty to limit fossil-fuel emissions. Carbon markets, along with cheaper renewable energy, have started to slow that growth.