China’s carbon prices surged last week because firms have reported its 2013 emissions before the deadline
China’s carbon prices surged last week because firms have reported its 2013 emissions before the deadline, so the markets may be less over-allocated than feared.
Spot permits in four of China’s regional pilot emissions trading schemes grew between 5 and 12 per cent last week, although market participants want to be cautious, because the liquidity staid low. “More companies are now coming to the market knowing their positions after calculating their 2013 emissions. This has pushed up the prices,” a market participant told.
Companies in the markets must report their 2013 carbon dioxide emissions to local regulators by the end of March or April, and then surrender the equivalent number of permits to governments by the end of May or June.
In the Shanghai market, permits rose 8.9 per cent over the week to 40.30 yuan ($6.59). Demand mostly came from oil and chemical companies, while major manufacturers and power generators remained on the sidelines. In Tianjin, prices shot up by 11.7 per cent to 33.20 yuan, Shenzhen saw a 6.1 per cent rise to 85.80 yuan, while in Beijing, spot permits were at 55.18 yuan, up 5 per cent for the week. The Guangdong market was untraded, as it has been since Dec. 20.
The Shanghai price rise came on the back of 38,000 permits being traded, while none of the other markets saw more than 6,000 permits change hands on the official exchanges. However, the Beijing Energy and Environment Exchange said that three deals totalling 42,000 permits at undisclosed prices had been negotiated off the exchange. Companies involved in larger bilateral deals are not required to publish prices. One source said the Shanghai volume was helped by a conference this week where high-level officials urged companies to start trading.
In conclusion, we can say that despite all of this and although analysts had feared permit prices would drop due to over-allocation in China’s new carbon markets that rely heavily on companies’ own emissions data, the emissions trading schemes in China are working.