The scheme, the world's largest, is part of China's plan to make use of market mechanisms to help bring its carbon emissions to a peak before 2030 and to net zero by 2060.
The Shanghai exchange said it would manage the ETS's trading platform.
Reuters reported that China's environment ministry plans to hold a launch ceremony on Friday.
Some 2,225 power plants, responsible for over 4 billion tonnes of carbon dioxide emission per year, will be included into the first phase trading.
The national ETS initially set daily trading limits at 10% of prices and limits for block deal will be set at 30% of price moves.
Trade would take place at 9:30-11:30 a.m. and 13:00-15:00 p.m. on working days.
(Reporting by Muyu Xu and Shivani Singh; editing by Kevin Liffey and Jason Neely)
