South China's Guangdong Province and Hong Kong are planning to co-operate on cross-border emissions trading, according to the Guangdong Provincial Environmental Protection Bureau.

An effort by both sides to clean up the skies above the Pearl River Delta region, the trading scheme is high on agenda to be discussed at the ninth Guangdong-Hong Kong Co-operation Joint Conference, which opens today in Guangzhou, capital of the province.

"Under the scheme, governments will sell emission quotas, or rights to emit a specific amount, to polluters," said Li Qing, director of the Guangdong provincial environmental watchdog.

Enterprises, especially power plants whose emissions fall under their quota, could sell the surplus to others who exceed their limit, according to Li.

The scheme would allow Hong Kong companies to save on their own emissions-reduction bills by buying quotas from their counterparts in Guangdong.

The overall aim is to create incentives for polluters to cut down on their emissions and clean up the environment.

However, Li said that they haven't decided a timetable for the implementation of the scheme as it involves many issues such as constructing a regulation and monitoring system across the two regions.

"We have worked out a proposal for emissions-trading and we are waiting for approval by relevant governmental organizations," Li said.

Once it is approved, the scheme will be recommended to some pilot power plants.

"And finally it will be implemented across the Pearl River Delta areas if it is a success," Li said.

The State Environmental Protection Administration announced an emissions-trading scheme involving seven pilot areas as an example of effective "free market environmentalism."

Li said that Guangdong also plans to offer subsidies to power plants in the region to install devices to remove sulphur from flue gas.

At present, only 18 per cent of factories in the region are fitted with the equipment, which has helped reduced emissions by up to 200,000 tons a year.

Besides the emissions-trading scheme, other environmental protection issues are also on agenda for the meeting, which will be attended by Hong Kong Chief Executive Donald Tsang, who arrived in the city yesterday.

Guangdong and Hong Kong have increased environmental protection co-operation over the past few years.

For example, a network to monitor air pollution in the Pearl River Delta region was jointly set up last year, and information about air quality is released to the public through the network every day.