China's national carbon market started online trading on July 16, a significant step to help the country reduce its carbon footprint and meet emission targets, according to the Ministry of Ecology and Environment.

Trading began at 9:30 am at the Shanghai Environment and Energy Exchange with the opening price for the carbon quota at 48 yuan ($7.4) per metric ton.

Carbon emissions by more than 2,000 power companies covered in the first batch of trading are estimated to exceed 4 billion tons per year, making the market the world's largest in terms of the amount of greenhouse gas emissions covered.

Carbon trading is the process of buying and selling permits to emit carbon dioxide or other greenhouse gases.

Companies are assigned quotas for carbon emissions and can sell surplus emission allowances to those in need of more pollution quotas.

China's national carbon trading market was launched in 2017 after a pilot operation in seven provincial regions in 2011. The idea behind its launch was to explore market-based mechanisms to control greenhouse gas emissions.

It is also expected to be an important scheme for China to realize the goal of peaking carbon dioxide emissions by 2030 and achieving carbon neutrality by 2060.

The first transaction of Zheijang occurred on the morning of July 16 with Zhejiang Provincial Energy Group Company Ltd successfully making a deal on 214,200 tons of carbon emission quota.