Carbon price in China’s first trading market overtakes EU's ETS

Clare Saxon Ghauri
22 August 2013

BEIJING: The price of carbon permits rose in China’s first carbon trading market in Shenzhen this week, overtaking the European Union’s Emissions Trading System (EU ETS).

Shenzhen pilot

On Wednesday permits increased on the Shenzhen Emissions Exchange--which is the first of seven pilot cap-and-trade markets in China and includes about 635 companies--to US$7 a metric ton.

The price is 20% higher than EU ETS allowances, which settled at US$5.85 in London’s ICE Futures Europe Exchange on Wednesday, according to Bloomberg New Energy Finance.

Charlie Cao, a Beijing-based analyst for New Energy Finance, commented: “Those trades show that at least some companies are increasingly serious about carbon trading.”

Chinese markets

Changhua Wu, Greater China Director, The Climate Group, said: “How to correctly interpret the traded carbon price on Shenzhen market remains a challenge. Still at a very early stage, Shenzhen Exchange sets an example of how to find a price for carbon, but the price itself as demonstrated by the latest information, while higher than the EU ETS market, could not be explained clearly today.

“The broader policy context in China definitely drives business towards low carbon practices, with carbon intensity target adopted at local and sector level. Now at the middle of the 12th Five-Year Plan period, many companies have to look ahead to see whether they would be able to achieve the set carbon reduction targets by 2015, which could potentially help accelerate market demands. And there are many other players on the market who might have also seen opportunities in the future.

“However, a more in-depth analysis is needed in order to answer the question on the reasons and implications of Shenzhen market’s raised carbon price this month.”

The other Chinese pilot markets are Beijing, Chongqing, Guangdong, Hubei, Shanghai and Tianjin, which together make up the world’s largest carbon trade program after Europe’s EU ETS. Combined, Bloomberg New Energy Finance predicts the markets will regulate 800 million to 1 billion tons of emissions by 2015.

Related news:

China unveils pioneering carbon trading scheme in Shenzhen

Global 2 degree target can be achieved with China's cooperation

Changhua Wu: Shenzhen carbon trading launch is a day to remember for China

By Clare Saxon


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