China Carbon Market Weekly Update – Aug 23, 2021

Week at a glance

For the trading week of August 16 through August 20, the China National Carbon Emissions Allowance (CEA) Market closed at RMB 49.00/ton with a weekly total volume of 1,422,012 tons. Regular open-quote trades totaled 22,012 tons while block trades totaled 1,400,000 tons. As of August 20, the national CEA market had a cumulative CEA trading volume of 7,940,844 tons and an average price of RMB 49.55/ton (USD 7.62/ton) including block trades. Compared to the week before, prices decreased appreciably for both the closing price (-9.26%) and average price (-12.36%) including block trades. Volume trickled to a minimum for regular open-quote trades but increased dramatically for block trades. The limited number of market participants is believed to be the main reason for the low total volume and the dominance of block trades in the market.

On the policy and regulation front, the Minister of Ecology and Environment indicated that the ministry would publish the Interim Regulation for the Management of Carbon Emissions Trading at the earliest date possible. Superseding the current Administrative Measures for Carbon Emission Trading (Trial), the Interim Regulation will provide a stronger legal foundation for further development of the national carbon trading system.

The People’s Bank of China (PBOC), China’s central bank, published two China financial industry standards, Guidelines for Financial Institutions Environmental Information Disclosure (hereafter the Disclosure Guidelines) and Environmental Equity Financing Tool (hereafter the Financing Tool), both effective July 22. Although not mandatory regulations, these two industry standards documents provide much needed (and anticipated) guidelines for China’s green financial system development.

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