China Carbon Monthly Market Update – June 2023

Monthly carbon market update (June 2023)

Trading in China’s national carbon emissions allowance (CEA) market in June jumped to a 2023 monthly high, totaling 2.3 million tons, an increase of 87% from May and well above the all-time median of 1.8 million tons. Nearly all of the increase came from a return of the open market transactions, after months of low volumes, to near their all-time monthly average of 1.6 million tons. On the policy and regulation front, the State Council on June 6 published its 2023 plan for regulation development. The much-anticipated Interim Regulation for the Management of Carbon Emissions Trading was downgraded to be among several regulations that would be “prepared for development”. That positioned it below the “to be reviewed” list, where items were marked for the Council’s immediate consideration and where the Interim Regulation had been for the past two years. It appeared that regulators, by further delaying the ratification of the Interim Regulation, had taken a step back on the development of a more enforceable emissions trading scheme that the CEA market represents.

Open market transactions closed in June at a seventeen-month high of 60.00 yuan ($8.30)[1] per ton. The volume-weighted average price for open market transactions was 57.53 ($7.96) yuan per ton for June, a 2023 high. Block trades, on the other hand, averaged only 50.15 yuan ($6.94) per ton for June, the lowest in eighteen months. The volume-weighted average price for all trades in June was 54.08 yuan ($7.48) per ton, a 4.14% decline from May.

[1] 1 US$ = 7.2258 RMB, middle price, June 30, 2023, China State Administration of Foreign Exchange. The same exchange rate is used for all other values quoted in US dollars ($) in the article.

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