The Tianjin Climate Exchange is preparing to launch what could become China's first domestic carbon market.

The exchange had started recruiting members for a cap-and-trade scheme which it expects to begin in six to 12 months, said Jeff Huang, assistant chairman of Tianjin Climate Exchange and vice-president of Chicago Climate Exchange.

TCX is a joint venture between Chicago Climate Exchange, the municipal government of Tianjin and the asset management unit of PetroChina, the country's largest oil and gas producer.

Half a dozen climate exchanges have been set up in China over the past year, and foreign exchanges have raced to team up with them as they see the potential for one of the largest carbon markets.

But so far these exchanges have only served as platforms for individual small-scale deals. There is no clear legal framework or policy for domestic carbon trading in China, and the government has yet to give clear signs of its approval.

One example was a deal under which a Shanghai-based car insurer purchased carbon credits on the Beijing Environmental Exchange last month in a voluntary deal to become carbon neutral.

Moreover, the Beijing exchange is co-operating with Bluenext, the Paris-based exchange, to offer credits generated by Chinese renewable energy projects to potential European investors.

The Tianjin exchange plans to go beyond that by launching a scheme similar to those established on the Chicago Climate Exchange.