Preparations for China's carbon emissions market have been completed, and online trading will start at an appropriate time this month, according to the Global Times. The exact date will be announced later. The Ministry of Ecology and Environment, which is in charge of the market, has not announced a date for the launch yet. Once launched, the market would help enterprises cut emissions while reducing costs, and it would help China realize its pledge to reach a carbon emissions peak in 2030 and become carbon neutral in 2060, analysts noted. “The carbon trading market is just one of the measures to reduce carbon emissions. It currently only covers the power sector, equivalent to about 4 billion tons of carbon dioxide (CO2) emissions, which should be cut to zero within 40 years under carbon neutral planning,” Wang Jun, Director of carbon asset management of Sichuan Yongxiang Co, told the Global Times.
According to the overall design of the carbon market, there are eight high-energy industries: electric power, petrochemicals, chemicals, building materials, steel, non-ferrous metals, paper making and civil aviation. These energy-intensive industries will face increasing pressure to reduce emissions, which will promote the optimization of the overall energy structure and green transformation. After the launch of the national carbon emissions trading market and with the gradual expansion of the coverage of industries and carbon reduction pledges, China's carbon price will rise sharply, and the market turnover is expected to exceed CNY2 trillion before 2030, said Wu Qi, Executive Dean of the Wuxi Institute of Digital Economy.
China has pledged to cut carbon dioxide emissions per unit of GDP by more than 65% from 2005 levels by 2030. According to estimates, China's peak CO2 emissions are about 12 billion tons. “The market is waiting to see what happens. Apart from trading, we should also have a monitoring and a verification mechanism to check whether enterprises have achieved their emissions reduction targets," Han Xiaoping, Chief Analyst at energy industry website china5e.com, told the Global Times. China's top economic planner has authorized seven cities and provinces to begin trials of carbon trading in October 2011. As of August 2020, the pilot carbon markets have covered more than 20 industries, such as steel, electric power and cement, involving nearly 3,000 enterprises, with a cumulative turnover of more than 400 million tons of CO2 and a value of CNY9 billion. “I don't think China is at the beginning stage of carbon trading. It has been 10 years since China started its carbon market pilot program, and a lot of experience has been accumulated in terms of quotas and the implementation of treaties,” an analyst of green finance and low-carbon economy said. But industry insiders also said that the liquidity of China's carbon trading market needed to be improved.
“The national carbon trading market included only 2,000 power companies initially. In the future, industries with greenhouse gas emissions reaching 26,000 tons per year can be included in the market, indicating a low level for participation with certain entry restrictions,” said Zhao Yue, Research Fellow on carbon neutrality, as reported by the Global Times.
According to a report by the Investment Association of China and the Rocky Mountain Institute, China's de-carbonization will create a market of CNY15 trillion by 2050, especially in resource recycling, energy efficiency, electrification, zero-carbon power generation, energy storage, hydrogen and digitalization. China's carbon emissions reduction plan is of great interest to overseas companies as it could help unlock a massive market with huge profit potential, Lin Boqiang, Director of the China Center for Energy Economics Research at Xiamen University, told the Global Times. “China welcomes the participation of global enterprises to reach the goal of carbon neutrality. As long as they want to be a part of the market, it could bring ample profits from the business,” Lin said.
