The national carbon market’s end-of-year transaction volume both rise

Original title: The national carbon market’s end-of-year transaction volume both rose

At present, the allocation of allowances in the national carbon market is still relatively loose, which is also reflected in market data such as carbon trading prices. Whether other industries will adopt the benchmark method to allocate quotas like the power industry in the future is still difficult to determine.

As an important marketization measure to promote low-carbon transformation, the national carbon market opened on July 16, 2021, and has received widespread attention. Although only the power generation industry is currently included in the national carbon market for trading and compliance, eight high-emission industries including steel, nonferrous metals, building materials, papermaking and other industries will be included in the “14th Five-Year Plan” period.

According to the previous notice issued by the Ministry of Ecology and Environment, key emission units in the power generation industry need to complete the clearance of allowances as soon as possible to ensure that all key emission units complete their compliance by 17:00 on December 31. At present, the eight major power energy groups, including State Power Investment Corporation, Huadian Group, Sinopec, and National Energy Group, have completed the first-year carbon quota payment of the national carbon market. As of December 30, the cumulative transaction volume of carbon emission allowances in the national carbon market was 175,829,534 tons, and the cumulative transaction volume was RMB 7,505,376,983.01.

2021 is the first compliance period for the national carbon market. Starting from the opening of the market higher than the expected carbon price of 48 yuan/ton, the national carbon market once broke through the 60 yuan/ton carbon price mark, and it was once because of the willingness to trade. Downturn, fell to 38.5 yuan/ton. As the end of 2021 is approaching the compliance period, the transaction volume and total transaction volume of the national carbon market have both risen, reaching new highs repeatedly. After two consecutive days of sharp increases, the highest carbon price reached 62.29 yuan/ton on December 30.

A number of industry experts told the 21st Century Business Herald reporters that the completion of the settlement ahead of schedule, the continuous growth of transaction volume but the relative dynamic balance of carbon prices, etc., all indicate that on the one hand, the current supply of allowances is relatively abundant, so the transaction price more reflects the enterprise. On the other hand, the carbon trading price does not form a relatively complete price transmission mechanism with the terminal electricity price. Therefore, some short-term fluctuations or control factors in the electricity generation link cannot be very intuitively reflected in the carbon price .

The overall national carbon market is advancing at a fast pace

According to the notice from the Ministry of Ecology and Environment, the key emission units that are included in the first compliance cycle of the national carbon market should pay their carbon emission quotas for the year 2019-2020 to the provincial eco-environmental authority before December 31. Before the end of 2021, the regional ecological and environmental authorities and key emission units will actively and orderly promote the clearance and payment of allowances. On December 7, Hainan Province took the lead in completing the payment of quotas for all key emission units, becoming the first region to achieve 100% compliance.

The construction of the national carbon market will be accelerated after the “dual carbon” target is proposed at the end of 2020. Wen Ya, a senior researcher at the Economic and Technological Research Institute of the Global Energy Internet Development Cooperation Organization, believes that the national carbon market has started at a very fast pace and achieved remarkable results. These achievements are based on the experience accumulated in the past few years of local carbon trading pilots on the one hand, and on the other hand, there are in-depth research on the specific mechanism design of the national carbon market as a prerequisite.

“If you compare and analyze the national carbon market with the EU carbon market, you will find that the national carbon market does not fully refer to the EU’s structure, mechanism, and model. In fact, the national carbon market’s own design reflects the country’s The design concept and consideration of China’s specific national conditions. It is with this in-depth thinking that a relatively good prerequisite foundation for the initial construction of the national carbon market has been laid.” Wenya said.

Build a linkage mechanism between electricity price and carbon price

It is precisely because there is no very successful and suitable precedent for China to refer to, the national carbon market is in a state of exploring while building. Wen Ya pointed out that there are still some areas for improvement in the national carbon market. Specifically, such aspects as route design, the lower legal status of the guiding documents, and the design of supporting mechanisms all need to be further improved.

Compared with my country’s own larger base in terms of carbon emissions, Lin Boqiang, Dean of the China Energy Policy Research Institute of Xiamen University, believes that the current national carbon market trading volume is still relatively small. Although the current carbon price level is comparable to the previous local pilots, the carbon price is still at a relatively low level.

“Only in terms of the only electricity sector currently included, if the current electricity price mechanism is still maintained, it will be difficult for carbon prices to form a corresponding linkage with it.” Lin Boqiang said.

Relevant departments are already trying to gradually carry out certain electricity price reforms. The executive meeting of the State Council held on October 8 clearly pointed out that under the premise of maintaining the stability of electricity prices for residents, agriculture, and public welfare undertakings, the fluctuation range of market transaction electricity prices should be adjusted from no more than 10% and 15% respectively to equal in principle. Do not exceed 20%, and do a good job of classification and adjustment. For high-energy-consuming industries, prices can be formed by market transactions, and they are not subject to the 20% rise.

Although the above regulations are based on the regulatory measures proposed in the background of the shortage of power and coal supplies and the power cuts in multiple places since September, in the view of Chen Zhibin, chief analyst of Beijing Zhongchuang Carbon Investment Technology Co., Ltd., “market transaction electricity prices fluctuate up and down. The proposal of adjusting the scope to no more than 20% in principle” is a very good starting point for opening up the linkage mechanism between carbon price and electricity price. And for some high-energy-consuming industries, the fluctuation may be even higher. “At present, everyone is not familiar with how carbon market prices are linked to electricity prices. If a more flexible market-based pricing mechanism can be formed in the future, then it can move towards a more stringent quota allocation mechanism.”

Quotas will be gradually tightened in the future

At present, the national carbon market adopts the method of relative total amount control, and uses the baseline method to calculate the total amount of unit quotas. In other words, first use the quota calculation method of relative total amount control to determine the total amount of quotas for the current year based on the overall total power generation. Then through the baseline method, the allocation standard is based on the advanced level of the industry, and the quota is determined based on the actual output of the relevant unit. This method is relatively flexible and can drive enterprises to reduce emissions while continuously adjusting and optimizing them based on economic fluctuations.

In this context, the allocation of allowances in the national carbon market is still relatively loose, which is also reflected in market data such as carbon trading prices. Chen Zhibin said that under the current relatively loose allocation, companies do not need to pay high costs for reducing emissions, and carbon prices mainly reflect the holding costs of companies. If quotas are tightened and the company’s emissions are required to drop significantly, the company will naturally use the corresponding emission reduction technology application cost to compare it with the carbon price in the national carbon market.

Lin Boqiang believes that carbon prices have remained relatively stable despite the fact that the total transaction volume at the end of the year has repeatedly reached new highs. In addition to indicating that the allocation of allowances is relatively ample, it also shows that the level of emission reduction technology of enterprises included in the national carbon market is similar, so carbon There is little room for price increases.

Lai Xiaoming, chairman of the Shanghai Central Exchange, recently revealed that according to the overall deployment of the competent authorities, the national carbon market may increase by two to three industries in 2022, and will strive to include all eight high-emission industries during the “14th Five-Year Plan” period. Include in the national carbon market. “Nature” magazine data shows that the power industry that is currently included first can cover more than 4 billion tons of carbon emissions. In the future, as the other seven high-emission industries are all included, it may cover about 8 billion tons of carbon emissions.

Wenya believes that the baseline method used in the initial national carbon market to allocate allowances is mainly to take advantage of the power industry’s better data base. “As a’vanguard’, if the national carbon market can play a more obvious role in reducing emissions in the power industry, it will play a better role in demonstrating other industries.”

Whether other industries will adopt the benchmark method to allocate quotas like the power industry in the future is still difficult to determine. Wen Ya said that this needs to be specifically considered based on the industry’s own data base and technological level. “The use of the baseline method should be a general trend, both theoretically and practically, because it is more flexible and scientific than the grandfather method, and it can also form a stronger industry emission reduction standard faster and continue to play a role in reducing emissions in the medium and long term. Motivation.”

Source: 21st Century Business Herald