Buildings are seen on a hazy day in downtown Chongqing January 30, 2013. REUTERS/ Carlos Barria

BEIJING (Reuters) - Companies obliged to reduce their carbon emissions in China’s pilot carbon exchange in Chongqing will be allocated a smaller number of permits for 2014, with the government tightening its grip on the market to tackle climate change.

Market regulators in the southwestern city of Chongqing handed out 116 million 2014 permits early this month, a decline of 7.2 percent compared with the amount issued for 2013, according to an announcement posted on the website of the local municipal development and reform commission.

Chongqing’s carbon market covers the greenhouse gas emissions of 242 local companies. It is one of seven pilot markets operating in China to help the country ease its reliance on coal and address the problems of climate change.

The Chongqing government handed out nearly 125 million permits for free last year to cover the 242 firms’ emissions in 2013. The 7.2 percent cut means that the firms must pay for additional permits in order to cover their obligations for 2014.

It originally said that it would cut permits by 4.13 percent a year until the local exchange was merged into the national market in 2016.

The companies are due to surrender permits to the authorities to cover their 2013-2014 emissions for the first time on June 20 this year, but no trading activity has taken place since 145,000 permits were sold on the day the market was launched in June last year.