China Carbon Weekly Market Update – Dec 6, 2021

Week at a glance

• The total trading volume on China’s national Carbon Emissions Allowance (CEA) market nearly doubled from the previous week, hitting a record of 14,168,886 tons, with block trades accounting for 79.0% of the total volume. Open market transaction prices closed slightly up at 42.94 yuan/ton ($6.73/ton). The total volume-weighted average for the week was down by 1.9% to 41.47 yuan/ton ($6.50/ton).
• The total weekly volume of the China certified emission reductions (CCER) markets surged by 123% from the previous week to a 2021 high of 21,501,020 tons, propelled by record volumes in the Shanghai, Tianjin, and Beijing markets. Shanghai saw a weekly average price increase of 37.4% to 36.77 yuan/ton ($5.77/ton), hitting its highest since this newsletter began calculating its offline trade prices in August.
• The Ministry of Ecology and Environment stated in a press conference on November 25 that the draft Regulation for the Management of Carbon Emissions Trading is currently under review and scheduled to be issued by the end of the year, which will elevate the rules governing the national CEA market to the status of national law, facilitating more detailed rulemaking and more effective enforcement.
• ZHANG Xiliang, a key architect of China’s national CEA market, stated in a public forum that he sees three key new developments for the market in 2022—a stricter baseline for allowance distribution, the introduction of auctions to allowance allocation, and the introduction of third-party investment institutions to the market.