China's carbon market starts trading on national scale

Out-Law News | 02 Aug 2021 | 9:45 am | 1 min. read

A nationwide online carbon market has opened in China for the first time. Previous online carbon trading was restricted to certain regions.

Carbon trading aims to help reduce the carbon footprint of businesses and help countries meet emission targets. In 2011 China launched a pilot scheme in Beijing, Tianjin, Shanghai, Chongqing, Shenzhen, Hubei Province and Guangdong Province.

Now the system has gone national, following the announcement in June of the extension of the carbon emissions trading system.

According to Xinhua net, carbon emissions by over 2,000 power companies covered in the first batch of trading are estimated to be over 4 billion tonnes each year, which means China's carbon trading market has become “the world's largest in terms of the amount of greenhouse gas emissions covered”.

Trading took place in the Shanghai Environment and Energy Exchange and the opening price for the carbon quota was 48 yuan ($7.4) per tonne. According to the South China Morning Post, the first permit for 160,000 tonnes of emissions was sold at 52.78 yuan ($8.1) per tonne for a total transaction volume of 7.9 million yuan ($12.2m). The carbon market closed at 51.23 yuan ($7.91) per tonne.

Carbon trading is the buying and selling of permits to emit carbon dioxide or other greenhouse gases.

Kanyi Lui of Pinsent Masons, the law firm behind Out-Law, said: “Trading in the national carbon market appears to have had a cautiously optimistic start. One could expect the price to increase as China’s policies aimed at achieving carbon neutrality by 2060 start to bite.”

In April, China launched Guangzhou Futures Exchange which will explore introducing electricity futures, climate-related products, commodity index futures and other unspecified "green-linked" commodities.

China announced its goal to have carbon emissions peak by 2030 and to achieve carbon neutrality by 2060 in September 2020.