China’s carbon trading scheme, the world’s largest, could see transactions reaching CNY100 billion in 2030, climate experts and officials said. The increase in volume will come as the country’s national Emissions Trading Scheme (ETS) takes shape. The scheme is expected to undergo several upgrades this year to meet China’s carbon peaking and carbon neutrality goals. “The basic framework of the national ETS has taken shape, and the price determination mechanism has taken effect,” said Liu Youbin, Spokesman for China’s Ministry of Ecology and Environment (MEE). In the next step, the MEE will focus on improving relevant laws and technical specifications, he said.
The expectations of an increase in volume came after China’s new carbon market met its first compliance deadline with a high compliance rate of 99.5%. The national ETS, which covers 2,162 firms from the power sector with total annual carbon dioxide emissions of 4.5 billion tons, completed its first compliance period on December 31, after its official launch in July last year.
Almost all trading companies have surrendered at least an equivalent number of carbon emission allowances (CEA) – which they can buy or trade under the scheme – for actual emissions in 2019 and 2020. Transaction volumes are expected to hit the CNY100 billion mark by 2030, the year China is targeting to peak its total carbon emissions. About CNY8 billion worth of carbon trading has been recorded since the national carbon exchange was launched in Shanghai mid July last year. The national ETS is going to expand to cover 7 billion tons of carbon emissions by 2025, 60% of China’s current total emissions, after gradually including all eight of China’s heavy industry sectors. The price of carbon under the national ETS could rise to CNY65 a ton this year, compared to previous levels of about CNY50 per ton, according to forecasts by Refinitiv. The scheme is also going to undergo several upgrades, allowing enterprises from two more sectors – building materials and non-ferrous metals – to participate in trading this year, the South China Morning Post reports.
