Foreign firms want to join Shenzhen carbon market

The China Emissions Exchange in Shenzhen has granted a trading license to Singapore-based broker Ginga Petroleum, with another eight foreign utilities and trading firms waiting in line.

Ginga became the first non-Chinese firm granted a foreign currency account to join Shenzhen’s pilot emissions trading scheme. Other companies looking to join the Shenzhen scheme include companies from Europe and the United States.

Ginga has been looking for an opportunity to join the Shenzhen carbon scheme because of its “promise”, said Amy Zhang, a trader with Ginga.

The Shenzhen market, covering around 33 million tonnes of carbon dioxide annually, is tiny compared to the world’s largest – the EU emissions trading system, which regulates over 2 billion tonnes.

A national Chinese market, when fully developed, will dwarf the European scheme, and some foreign carbon traders are eager to get an early foothold in the market.

A document distributed by the China Emissions Exchange listed a number of foreign companies that are in discussions to join the Shenzhen market, the smallest of China’s seven pilots.

Four European-headquartered utilities – BP Energy Asia, Shell (China), Statkraft and Vattenfall – were among the applicants, according to the document.They were joined by four trading houses – UK-owned Carbon Trading Capital, Japan’s Econos, U.S. company Freepoint Commodities and Virtuse Group (Suisse).

Most of China’s carbon markets have been plagued by poor liquidity since they opened, and several are trying to attract foreign companies, especially those with experience in Europe. Last month, Shenzhen got government clearance to let deals be settled in foreign currencies.