China Carbon Weekly Market Update – Apr 18, 2022

Week at a glance (April 11 – April 15, 2022)

  • The trading volume of China’s national Carbon Emissions Allowance (CEA) market increased significantly from the previous week to 375,970 tons. Block trades, coming in at a weekly total volume of 375,880 tons, accounted for nearly all of this week’s volume. Open market transaction prices, on a record-low weekly volume of 90 tons, did not change all week, closing at 60.00 yuan/ton ($9.42/ton). The weekly volume-weighted average price for all trades came at 57.13 yuan/ton ($8.97/ton).
  • Activity across the nine China certified emission reductions (CCER) markets continued to decline, down to a combined total volume of 13,597 tons for the week. Sichuan led the market, holding 95% of the markets’ total volume. Market activity has been dwindling since the start of 2022, suggesting a restricted supply of CCER credits, likely caused by the consumption of CCER credits by the CEA and regional emission allowances markets for compliance. Shanghai’s weekly average CCER credit price last week was 78.77 yuan/ton ($12.36/ton), significantly higher than that of the CEA’s. Sichuan’s weekly average CCER price of 52.21 yuan/ton, despite being lower than previous several weeks, held up well above the market’s average of 26.77 yuan/ton over the last three months of 2021 as well as the 2022 average of 43.70 yuan/ton as of April 15.
  • In a wide-range interview with Jiemian Media, Prof. Zhang Xiliang, Director of the Energy and Environmental Economics Research Institute at Tsinghua University, widely considered the architect of China’s CEA trading system and its marketplace, indicated that he expected the much-anticipated Interim Regulation for the Management of Carbon Emissions Trading to be published in 2022. This report would give the regulators more power and tools to ensure emission data quality for the market. Mr. Zhang also expects an auction system for allowances distribution, together with the inclusion of more covered industrial sectors and the participation of financial players in the market, to be introduced for the third compliance cycle (2023).
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