Carbon emission trading will soon start in Shanghai, the Shanghai Municipal Development and Reform Commission, the city's economic planning body, announced on Tuesday.

The announcement said the Shanghai Environment and Energy Exchange sent out notices for opening accounts in early October and some enterprises have already opened trading accounts with the exchange.

Emission trading is a widely adopted method of putting a price on carbon dioxide emissions produced by burning fossil fuels such as coal and gas.

Under the program, factories and other major carbon producers will have to curb pollution by capping the volume of emissions. Cleaner companies can sell excess permits to dirtier ones, thus setting a market price aimed at reducing overall emissions.

China currently is the world's biggest carbon emission source.

China is likely to start carbon emissions trading in Beijing, Shanghai and Guangdong province by the end of this year.

A national-level emission trading platform may be set up by 2015 based on the performance of these local markets.

The nation's first carbon trading market was set up in June in Shenzhen city as a pilot program.