In an effort to reverse the adverse consequences of air pollution, in 2006, China started to consider a national pollution permit trading system in order to use market-based mechanisms to incentivize companies to cut pollution. This has been based on a previous pilot project called the Industrial SO2 emission trading pilot scheme, which was launched in 2002. Four provinces, three municipalities and one business entity was involved in this pilot project (also known as the 4+3+1 project). They are Shandong, Shanxi, Jiangsu, Henan, Shanghai, Tianjin, Liuzhou and China Huaneng Group, a state-owned company in the power industry. This pilot project did not turn into a bigger scale inter-provincial trading system, but it stimulated numerous local trading platforms.