Shanghai United Assets and Equity Exchange (SUAEE) announced on its official microblog and website on June 7th that the national carbon emissions trading system has recently passed the technical acceptance. The highly anticipated national carbon emissions trading market (hereinafter referred to as the “national carbon market”) is scheduled to be officially launched at the end of June this year. Various signals from the central and local authorities have shown that all the preparations are in place. Many regions and industries will compete in advance for a place in the national carbon market.
Industry insiders believe that the launch of the national carbon market will have an impact on the investment and production decisions made by the society, industries and enterprises, and bring benefits to multiple fields such as new energy and renewable resource recycling.
China has pledged to reach peak carbon dioxide emissions by 2030 and achieve carbon neutrality by 2060. Accelerating the establishment of a national carbon market, one of the core policy instruments to implement this vision, is included in this year’s government work report.
Liu Youbin, spokesman from the Ministry of Ecology and Environment (MEE), said at a press conference that, in accordance with the Administrative Measures for Carbon Emissions Trading (Trial), MEE has organized relevant enterprises to complete the trading simulation tests and real money tests. He added that preparatory work for the launch is underway and the national carbon market is to be launched by the end of June this year.
Shanghai United Assets and Equity Exchange held the technological acceptance meeting on the national carbon emissions trading system. The experts at the meeting agreed that the system meets the requirements and operates stably, and its materials are complete and in compliance with relevant standards, and therefore the trading system passed the acceptance. SUAEE stated that as the national carbon market is to be launched soon, it will strive to ensure the smooth operation of the national carbon emissions trading system, and continue to optimize its functions and performance in accordance with the requirements of relevant competent authorities and with the development needs of the national carbon market.
Mechanisms for launching the national carbon market are basically established. On May 19, MEE released the Administrative Rules for Carbon Emissions Registration (Trial), Administrative Rules for Carbon Emissions Trading (Trial) and Administrative Rules for Carbon Emissions Settlement (Trial). It is generally believed within the industry that these documents further regulate the national carbon emissions registration, trading and settlement, fully incorporate the effective practice of the previous pilot cities, and strongly support the launch of national carbon market with well-established mechanisms.
As of March this year, the trading pilot project has covered nearly 3,000 key emitters from more than 20 industries, with a cumulative coverage of 440 million tons of carbon emissions and a cumulative transaction of about RMB 10.47 billion. Liu Youbin estimated that the national carbon market will raise the coverage to more than 4 billion tons, ranking first globally in the coverage of greenhouse gas emissions.
The national carbon market will focus on the electric power industry (pure power generation and cogeneration) at its initial stage, and then gradually expand to petrochemical and chemical industries, and industries of building materials and steel. Over half a year from the official launch of the national carbon market to the end of this year, more than 2,200 electric power generators will complete the whole process of carbon emission quota allocation, trading, compliance and settlement.
As the first compliance cycle after the national carbon market is launched, 2021 is very critical for enterprises. Zhao Weidong, Head of Energy Conservation and Environmental Protection Research Institute of China Center for Information Industry Development, pointed out in an interview with Economic Information Daily that considering that China is applying free quotas, it is necessary to determine the initial quotas in a scientific way, which is especially important for engaged enterprises. He stressed that as the market matures, a model of free quota plus auctioned quota (paid quota) may gradually be established.
“During this period, a pricing mechanism under the national carbon market will be established, and this will have an impact on the decision-making of the society, industries and enterprises in energy investment and production,” said Li Jin, Deputy General Manager of Shanghai Environment and Energy Exchange, on the Hongqiao International Economic Forum on June 3rd.
Zhao Weidong believes that, from the perspective of energy consumption, industries with high carbon emissions are most impacted, and thermal power, coal, smelting, petrochemicals and other traditional high energy-consuming industries face serious challenges in the phase-out and exit of outdated capacity. Enterprises with good performance in emission reduction may see opportunities for industrial consolidation. Meanwhile, new energy such as wind power, solar power, nuclear and hydrogen power, as well as low-carbon industries such as recycling of renewable resources, green buildings and new-energy vehicles will benefit from the carbon trading market. In addition, typical projects that benefit most directly from this market will be those in renewable energy, forest carbon sink, and methane utilization.
In an interview with Economic Information Daily, Sun Yongping, Vice President of the School of Low Carbon Economy at Hubei University of Economics and Executive Deputy Head of Center of Hubei Cooperative Innovation for Emissions Trading System, said that a large part of China’s carbon emissions come from excess capacity, which not only consumes a large amount of resources and pollutes the environment, but also sees decreasing contribution to tax revenue, employment and economic growth. He pointed out that if the carbon market can successfully transform the cost pressure into an endogenous growth driver for enterprises, China will be able to achieve a win-win synergy between multiple goals such as economic development, environmental improvement, energy conservation and carbon emission reduction.
In fact, many places have made preparation in advance for the national carbon market. Shanghai proposes to build an international carbon financial center based on the national carbon market. Guangdong has made it clear that it will deepen the pilot project of carbon trading during the 14th Five-Year Plan and actively promote the establishment of a carbon market in the Guangdong-Hong Kong-Macao Greater Bay Area. Beijing said that it will improve the carbon emissions trading system and build a national center for voluntary reduction administration and trading of greenhouse gas emissions.
Sun Yongping said that the national carbon emission registration system, established in Wuhan, not only fills the gap that Wuhan has no national trading institution, but also brings important opportunities to Wuhan. He believes that Wuhan can seize this opportunity and turn the advantages of assets, capital, talents, enterprises, technologies and platforms brought by this system into advantages for developing local green and low-carbon industries as the new drivers for economic development.
Enterprises are also prepared to seize the opportunities brought by the carbon market. For example, Huawei invested RMB 3 billion to set up Digital Energy Technology Co., Ltd. on June 7, which operates in photovoltaic power, electric power and new-energy vehicles and aims at tapping the potential of managing “Watt with Bit”. Golden Concord Holdings Limited, a leader in photovoltaic industry, has entered the hydrogen energy industry and signed cooperation agreements with a number of strategic partners recently.
Wu Qi, Executive President of Wuxi Digital Economy Institute, said that high-tech enterprises have gradually become the major carbon emitters, and it is necessary to improve energy consumption efficiency and the proportion of renewable energy in energy supply. He suggested that high-tech enterprises facilitate carbon emission reduction in key industries such as power, transportation, manufacturing and building by offering access to technologies and solutions such as artificial intelligence, big data, and energy Internet; develop green supply chain management to help suppliers and value chain partners change their ways of operations for carbon emission reduction; and establish inclusive carbon platforms and personal carbon accounts by means of digital technologies and products to reach more stakeholders, and to help users and consumers enhance the awareness of carbon neutrality and promote carbon neutrality.
(Source: CCPIT / Economic Information Daily)
Zhang Yongming Chairman ...
Promoting international trade, promoting utilization of foreign investment, prom...
CCPIT Beijing, a foreign economic and trade organization composed of representat...