Tag Archives: china
China Carbon Permits Trade 22% Below Europe’s on Market Debut
By Benjamin Haas & Mathew Carr – Jun 18, 2013 China traded its first carbon dioxide permits for 22% less than today’s price in Europe as the nation inaugurated the Shenzhen Emissions Exchange as part of its plan to limit heat-trapping gases linked to climate change . The permits were priced from 28 yuan to 30 yuan ($4.90) a metric ton, according to Chen Hai’ou, chief executive officer and president of the exchange. That’s compares with 4.71 euros a ton ($6.30) today for European Union permits on London ’s ICE Futures Europe exchange, the world’s biggest carbon market by traded volume. Shenzhen, the first of seven test markets to start in the world’s most populous nation, is one of China’s Special Economic Zones designed to promote market policies. Its new cap and trade program will initially include 635 companies. The Shenzhen exchange traded 21,112 tons of carbon in eight transactions valued at 613,236 yuan, according to a video presentation at today’s opening ceremony. “The meager volume and pre-approved price level of today’s trades is likely to characterize the initial stages of all of China’s seven ETS pilots,” said Richard Chatterton, a London-based analyst for New Energy Finance. China had planned to start all seven pilot programs this year, with Shenzhen’s market followed by Beijing, Shanghai , Guangdong, Tianjin, Chongqing and Hubei. Some of the markets may start in 2014, Xie Zhenhua , vice president of the National Development and Reform Commission, said at today’s ceremony in Shenzhen. He didn’t disclose which exchanges are behind their original schedule. Buying Permits The new markets are set to regulate 800 million to 1 billion tons of emissions by 2015 in the world’s biggest cap-and-trade program after Europe’s, according to Bloomberg New Energy Finance. PetroChina Co., China’s biggest oil producer, and Hanergy Holding Group Ltd., a renewable-energy company, each bought 10,000 allowances today from Shenzhen Energy Group, according to the video presentation. PetroChina paid 28 yuan for its permits, while Hanergy paid 30 yuan, according to the presentation. Shenzhen City Bao’an Water Services Co. and five individuals also bought permits. The names of individuals were not disclosed. For Related News and Information: To contact the reporter on this story: Benjamin Haas in Hong Kong at bhaas7@bloomberg.net Continue reading
Can China Achieve Success With Carbon Trading Scheme?
By Puneet Pal Singh Business Reporter, BBC News China’s rapid industrialization has contributed to the rising pollution levels in the country Over the past few years China has earned itself quite a few crowns in the “world’s-biggest” category. It has become the world’s biggest internet market, largest car market, biggest exporter… the list goes on and on. While Beijing takes a lot of pride in some of these achievements, there is one title that it wants to let go of sooner rather than later, that of being the world’s biggest polluter. And in an attempt to do so, China has launched a pilot project of its first ever carbon trading scheme in Shenzhen. “This is definitely a big game-changer for China,” says Winnie Tang, a director with Kind Resources, an investment and deal advisory firm which focuses on carbon emission reduction. “It is a clear indication that they are serious about reducing emissions and bringing down pollution levels.” ‘Market-based policy’ Under carbon trading, firms are given credits – each equal to one tonne of carbon emissions. There is a cap on the credits issued to ensure that firms keep their emissions under control. “It is still a very new concept to the Chinese firms. They have little experience in recording their emissions and trading carbon credits” The companies are required to measure and report their carbon emissions and to hand in one allowance for each tonne of carbon they release. If companies emit less carbon than their allowance, they can trade their credits. On the other hand, if their emission levels exceed the limit, they have to buy fresh credits – thus putting a price on pollution. “It is a market-based policy. If someone emits more – they have to pay for it,” says Princeton Peng, chief executive of Climate Bridge, a firm specialising in carbon trading and offset project development. Mr Peng says this is likely to force companies to implement policies aimed at bringing down their emission levels and as a result help reduce overall pollution. China’s carbon trading scheme pilot projects Location Companies trading emissions Emissions covered SOURCE:CARBON MARKET WATCH Beijing 420 – 600 50% Shanghai 197 50% Tianjin 120 60% Chongqing NA NA Shenzhen 635 40% Guangdong 830 42% – 50% Hubei NA 35% European lesson? However, there are also concerns in China about what will happen to the price of credits when companies start to trade them. Some say that the price of these credits will rise as China looks to cut pollution levels, which may spark speculative trades. An excessive movement in the pricing of credits, on either side, could be detrimental to the overall objective of the scheme. “If the price goes too high, it will severely impact the operations of the companies,” says Mr Peng of Climate Bridge. Carbon emissions in China – key milestones 2006: Preliminary plan for nationwide emission trading scheme outlined 2008: Environment and energy exchanges established in Beijing, Shanghai and Tianjin 2010: 12th five-year plan lists carbon markets as key measure for reducing carbon and energy intensities 2011: Seven carbon trading pilots announced 2013: Shenzhen pilot starts Source: Climate Bridge “On the other hand, if the market price is too low – there is no incentive for people to reduce emission and invest in clean energy solutions.” These concerns stem in part from the developments in the European Union’s carbon trading market – currently the world’s biggest. The European Union (EU) market has seen the price of credits falling to $4 per tonne in recent weeks, from $40 per tonne a few years ago. Analysts blame the sharp decline on two key issues. They say that the rise in prices after the launch of the scheme in 2008 was triggered in part by traders who speculated that the carbon prices would keep rising. At the same time, they argue that authorities issued excessive amounts of credits which narrowed the demand-and-supply gap. That coupled with an overall slowdown in the EU economy resulted in the price of the credits falling and raised concerns about the future of the scheme. However, analysts say that Beijing has had the opportunity to learn from the developments in the EU and has fine-tuned its scheme. “No one really knows what is going to happen with the China market, but they have done their research on what the EU got wrong and are less likely to make those mistakes,” says Ms Tang. ‘Learning process’ The pilot in Shenzen is the first of seven such projects that will be launched in China over the next few months. Beijing plans to eventually launch a nationwide carbon trading scheme by 2015-16. Analysts say that by piloting the scheme across different areas, China is looking to ensure that it can tackle any teething issues and iron them out before the country-wide launch. “This will be a learning process both for the government and companies,” says Yue-tan David Tang, secretary of the board of Tianjin Climate Exchange. “The companies will have to learn how to take part in the emissions market. “The government will have the time and the opportunity to improve upon emission data infrastructure – which includes the quality of data collected and how it is collected,” he explains. Mr Tang adds that there is political will in China to get the scheme rolling and the success of the pilot programmes will only strengthen that commitment. When launched nationwide, the scheme is likely see China emerge as the world’s biggest carbon trading market. And if that helps to bring down pollution levels substantially, it will be one crown that Beijing will wear with pride. Continue reading
China Takes Cautious Step Toward Carbon Emissions Trading
http://s1.reutersmed…r=CBRE95H0GNH00 By David Stanway BEIJING | Tue Jun 18, 2013 1:59am EDT (Reuters) – China launched its first pilot carbon emissions exchange on Tuesday, though plans for a nationwide rollout and efforts to apply the scheme to some polluting heavy industries could be undermined by a slowdown in the world’s No.2 economy . High-emission industries such as aluminum and steel are likely to resist higher costs as they are already battling weak prices due to tepid demand and a persistent supply gut. “It is a very big concern for Beijing and for local governments – how to strike a balance between controlling emissions and maintaining economic growth especially amid a general slowdown in the economy ,” said Shawn He, lawyer and carbon specialist at the Hualian legal practice in Beijing. While the exchange in the southern city of Shenzhen will not immediately lead to a big cut in China’s emissions of climate-changing greenhouse gas , now the world’s highest, it does still represent a statement of intent by Beijing, campaigners said. “This is just a baby step when you look at the total quantity of emissions, but it enables China to establish institutions for carbon controls for the first time,” said Li Yan, head of environmental group Greenpeace’s climate and energy campaign in China. Under such a cap-and-trade scheme, companies must buy allowances from others if they want to exceed carbon limits. But there is still a long way to go in China, and the design of its pilot platforms – as well as the national scheme that would eventually replace them – face economic and social pressures. “Of course, decision makers have to look at the social impact – the carbon market cannot be designed in an idealistic way and you have to make sure the design of the mechanism will address such issues as social stability,” said Wu Changhua, China director with the London-based Climate Group consultancy. And the example of carbon markets overseas is not encouraging, with the global financial crisis saddling Europe’s Emissions Trading Scheme with a crushing oversupply of carbon credits and record low prices. The Shenzhen exchange is one of seven pilot schemes due to be launched this year or next, and will involve 635 local industrial enterprises accounting for more than a quarter of local GDP and more than 30 million metric tons (33.07 million tons) of CO2 emissions. But that is still a drop in the ocean compared to the country’s total emissions of around 8 billion metric tons last year Other platforms due to start in 2013 include one in the business hub of Shanghai, where leading steel mill Baoshan Iron and Steel will participate, and Hubei province, home of Wuhan Iron and Steel. INDUSTRIAL IMPACT While giant oil firms like CNOOC and PetroChina will take part in the Shenzhen scheme, few of the companies involved will be from bloated but carbon-intensive heavy industrial sectors such as steel or aluminum , and figuring out how to include them is likely to be a bigger challenge. Late last year, China’s industry ministry told firms in sectors like steel to reduce their 2010 carbon intensity rates – the volume of CO2 produced per unit of output – by 18 percent by 2015. That was a massive burden for a sector already bruised by rising input costs and minimal returns, with the country’s economy growing at its slowest pace for 13 years in 2012 and data so far this year surprising on the downside. But while it will add to the costs of struggling firms, it could also give Beijing another tool to bring wayward industries in line with state policies and force polluting firms to close. Carbon trade will give local governments an alternative source of revenue as well as an incentive to free up some of their CO2 allocations by closing small steel mills. Jiang Feitao, a researcher at the China Academy of Social Sciences who has studied the impact of environmental policy on the steel sector, said smaller companies would be hit hardest by costs. NATIONAL TRADE After Shenzhen, Shanghai and Hubei, four more pilot exchanges are due to open in the capital Beijing, the sprawling industrial municipalities of Tianjin and Chongqing, and the manufacturing center of Guangdong province on the southeast coast, probably next year. The National Development and Reform Commission said the seven pilot schemes will begin a process of integration in 2015 and that a nationwide platform will go into operation some time before 2020. But the seven regions were given considerable leeway to design their own schemes and it remains unclear how they will connect together. “My guess at this moment is that they will set up a national platform and gradually integrate the seven pilot schemes into that one, but we don’t know the architecture yet – this is very new,” said Climate Group’s Wu. He, the lawyer, said China still needed legislation to give legal recognition to the concept of carbon trading. It also needed to solve the longstanding problem of measuring emissions. “I don’t think it is possible to get to a national market by 2015 – there are many technical issues to be addressed to integrate these islands into one continent,” He said. China also eventually needs to set a national limit on emissions and allocate this to individual industries and provinces to establish a full countrywide trading scheme. “Realistically, we are looking at 2025 before we have a cap – a few years ago some were saying 2040 or 2035 so we have already made progress,” said Wu. “Growth will continue to be the No.1 priority. Cap-and-trade will be one of the ways of trying to grow differently, but China is still a developing country and we have to grow.” (Editing by Joseph Radford) Continue reading
