Weeks at a glance (October 31-November 4, 2022)
- Activity in China’s national Carbon Emissions Allowance (CEA) market saw a sharp increase in the wake of a strong showing of block trades, totaling 1,309,451 tons for the week. Block trades totaled 1,281,209 tons, reaching their highest volume since late February. Open market transaction prices started the week unchanged from the closing price of the previous week, 58.00 yuan/ton ($7.99/ton ), and remained there for the entire week. The volume-weighted average price of all of the week’s trades set a 2022 low at 48.81 yuan/ton ($6.73/ton)
- Activity across the nine China Certified Emission Reductions (CCER) markets went in the opposite direction to the CEA market, decreasing precipitously to 32,764 tons for the week. Tianjin led the markets again, accounting for nearly 95% of their combined volume. Sichuan, Shanghai, and Beijing also saw some activity. Both Beijing and Sichuan had only open market transactions for the week, with a volume-weighted average price of 88.00 ($12.12) and 55.12 yuan/ton ($7.60/ton), respectively.
- On November 3, the Ministry of Ecology and Environment published the Implementation Plan for the Determination of the 2021 and 2022 China Emission Allowances Caps and their Allocation (the Power Generation Sector), Draft for Public Comment (the Plan). The Plan sets December 31, 2023, as the deadline for the second compliance cycle of the CEA market, covering both 2021 and 2022. It introduces the concept of the ‘surplus-deficit balance value” or the Balance Value. The Balance Value is the base emission factor for a particular class of generators at which the actual total emission is equal to the total allowance allocation. According to the Balance Value and the base emission factor in the Plan, for general coal-fired power generators with a capacity greater than 300MW, the target emission reduction is 0.12% for 2021 and 0.62% for 2022. For non-general coal-fired generators, which usually have lower capacity, these numbers are 2.9% and 3.3%, respectively.