China Carbon Monthly Market Update – December 2022

Monthly carbon market update (December 2022)

Trading in China’s national carbon emissions allowance (CEA) market rose to its 2022 monthly high of over 26 million tons in the last month of the year. Block trades accounted for an overwhelming 95.8% of the volume, suggesting that many of these trades may be between subsidiaries of the same parent company for their internal end-of-year CEA balancing, as block trades have been thought to be the main trading method for intra-company transactions and the allowance submission deadline for the current compliance cycle was still one year away. The last two months of 2022 saw a burst of trading activity after the release of the draft CEA allocation plan by the Ministry of Ecology and Environment in early November. The two months combined to account for over 66% of the 2022 annual total volume.

Market prices diverged on strong volumes. Open market transactions closed December and the year at a 2022 low of 55.00 ($7.90) yuan per ton. The volume-weighted monthly average price for open market transactions was 56.39 yuan ($8.10) per ton, also a 2022 low. Block trades, on the other hand, finished the year with a December volume-weighted average price of 55.55 yuan ($7.97) per ton, 1% higher than the 2022 yearly average of 54.98 yuan per ton. The volume-weighted average price for all trades in December was 55.59 yuan ($7.98) per ton.  For the entire of 2022, the volume weighted-average price for all trades was 55.30 yuan ($7.94) per ton.

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