China's carbon market has attracted much attention since its online trading launched on July 16, 2021. According to statistics, the total trading volume of the first week (as of July 23) Chinese Emission Allowance (CEA) was 4.833 million tons, and the total transaction was worth about CNY 250 million. So far, China has gradually formulated to facilitate green and low-carbon transition, including the carbon trading market. The specific analysis is as follows:
Carbon market trading prices rise steadily
According to the Shanghai Environment Energy Exchange, the highest CEA transaction price last week was CNY 61.07 per ton, while the lowest was CNY 52.08, and the closing price on July 23, 2021 was CNY 56.97 per ton, an 11.20% increase over July 16. On July 21, Sinopec purchased 100,000 tons of CEA from China Resources Company, which was the first agreement-based block transaction since the national carbon market was officially launched, with the amount of CNY 5.292 million.
According to industrial experts, there are still many companies accumulating carbon trading experience. With the continuous enterprise participation, it is expected that the carbon price will keep rising, and CEA price will increase as China is about to achieve emission peak and carbon neutrality.
Multiple initiatives to promote green transition
In order to achieve emission peak and carbon neutrality goals, various Chinese ministries recently issued several documents to put forward more green and low-carbon transition initiatives after launching the carbon trading market.
At the central government level, the State Council in July 2021 issued the Opinions on Promoting the High-quality Development of the Central Region in the New Era. It proposes to support constructing a batch of demonstration cities and parks for the circular economy. Actions will be taken such as constructing energy-saving institutions, green homes, green schools, green communities, green buildings, etc. to encourage green consumption and travel.
PENG Huagang, the Secretary-General and spokesperson of the State-owned Assets Supervision and Administration Commission of the State Council stated that the Commission will guide state-owned enterprises to strictly control the fossil energy consumption and actively develop new energy sources such as hydropower, wind power, power generated by PV technologies, and nuclear power. It will build a new power system with new energy, and coordinate the development on hydrogen energy’s "production, transportation, storage and use".
At the local level, initiatives are also released continuously. For example, Zhejiang Province issued the Action Plan for the Banking and Insurance Industry in Zhejiang Province to Support “6+1” Key Fields to Help Achieve Emission Peak and Carbon Neutrality. It focuses on six major areas including energy, industry, construction, transportation, agriculture, and residential life, as well as green and low-carbon technological innovation. The document also clarifies timetables, roadmaps and specific work initiatives with 20 key tasks and specific financial support in 38 key areas.
Ningxia Province conducts research on carbon emission distribution and industry features, and strengthens the management and control of key carbon emission regions, industries, and enterprises. Specific measures include: strengthening management of corporate carbon emission reports, facilitating the construction of corporate energy and carbon emissions management systems, popularizing new low-carbon processes and technologies, promoting the efficient use of coal and substitution of electric energy in the industrial sector, motivating the reduction of greenhouse gas emissions, exploring incentives for reducing carbon emissions in corporate resources, and encouraging high-carbon emission enterprises to carry out research on carbon peak.
Accelerated adjustment on energy industry structure
With the establishment and continuous improvement of national carbon market, more high-emission industries including petrochemicals, chemicals, building materials, and steel will be gradually included in the market. Based on this, the structural adjustment of China's energy industry is also accelerated.
It is reported that China’s emission peak and carbon neutral “1+N” policy system will be released soon to help accelerate China’s green and low-carbon transition and innovation. Its main content involves optimizing the energy structure, controlling and reducing coal and fossil energy, promoting industry optimization, and curbing the blind development of high energy-consumption and high-emission industries.
With the goal of emission peak and carbon neutrality, many industries have made certain achievements.
Some thermal power companies use low-level pulverized coal with large reserves and low prices as basic raw materials. They also adopt technical means and innovative measures to carry out zero-carbon power generation, and to achieve clean energy production with electricity, coal tar, and carbon monoxide master batch to reduce carbon emission.
In terms of steel industry, the first draft of the Implementation Plan for Emission Peak in Steel Industry has been initially completed. About 650 million tons of crude steel capacity by 237 enterprises in China has been completed or is undergoing ultra-low emission transformation.
And for petrochemical industry, Sinopec announces that it will start a megaton-level CCUS (carbon dioxide capture, utilization and storage) project – the Qilu Petrochemical-Shengli Oilfield CCUS project. It covers three stages: carbon capture, utilization, and storage. And it will become the largest CCUS demonstration base for the entire industry chain in China. Such project is of great significance to effectively improve China's carbon emission reducing capability and build an "artificial carbon cycling" model.
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