CHINA DATA: Big power producers fulfill obligations ahead of due date for first compliance cycle

The daily weighted average price of a Carbon Emission Allowance, or CEA, under China's national carbon market rose by 6.1% week on week to Yuan 49.52/mtCO2e (approx. $7.77/mtCO2e) on Dec. 24, according to data released by the Shanghai Environment and Energy Exchange (SEEE) late Dec. 24. The weekly trade volume totaled 20,122,764 mtCO2e, down from the previous week's record high of 53,671,920 mtCO2e, the data showed.

The national environment ministry requires all provincial environment ministries to ensure 95% of eligible companies fulfill their compliance obligations by Dec. 15 and 100% fulfillment by Dec. 31. CEA trade volumes have grown significantly in December as the due date is approaching.

Fulfilling the compliance obligation means a company's emissions beyond assigned quotas have been offset with CEAs and China Certified Emission Reductions, or CCERs. CCERs are China's domestically-certified carbon credits that can be purchased on voluntary basis or used by companies in the compliance market to offset up to 5% of emissions beyond the assigned quotas.

Up till Dec. 24, the month's trade volume totaled 107,487,128 mtCO2e, significantly higher than the sum of trade volumes in all previous months (from the national carbon market's opening in July to Nov), which was 43,231,710 mtCO2e. The trade volume for the week ended Dec. 24 fell from the previous week's level as quite a few large power producers announced that their compliance obligations had been fulfilled.

Four of China's five largest state-owned generation utilities, jointly known as the 'Big 5', have announced that their compliance obligations have been fulfilled, including China Datang Group, State Power Investment Corporation (SPIC), China Huadian Corporation and China Energy Investment Corporation.

In comparison, the European emission allowance price was at Eur 76.49/mtCO2e (approx. $86.62/mtCO2e) on Dec. 24, and California carbon allowances were at $30.20/mtCO2e in the week to Dec. 23, according to S&P Global Platts assessments. In the Asia Pacific region, South Korea's Emission Trading Scheme's daily closing carbon price stood at Won 35,000/mtCO2e (approx. $29.47/mtCO2e) on Dec. 24, according to official exchange data.

The price and volume data are published by SEEE, which currently hosts the online carbon trading platform for China. It does not provide information on bid, offers and counterparties.

In China's energy transition and carbon market, recent developments included the following:

• China Energy Investment Corporation's 149 subsidiaries enrolled in the national compliance carbon market all fulfilled their compliance obligations on Dec. 21, SEEE said on its official social media account Dec. 23.
• The 15 subsidiaries of China Petroleum & Chemical Corporation, or Sinopec, that own captive power plants all fulfilled their compliance obligations on Dec. 15, SEEE shared on its official social media account Dec. 20.
• Inner Mongolia Energy Investment Group Co. Ltd (IMEIC) fulfilled its compliance obligations on Dec. 16, SEEE shared on its official social media account Dec. 20. IMEIC disclosed they utilized internal trading of CEAs among the subsidiaries at an average price of Yuan 42.94/mtCO2e (approx. $6.74/mtCO2e), which is lower than the recent market average price.

TABLE 1: China Carbon Market Weekly Prices and Trade Volumes

TABLE 2: China Carbon Market Highest and Lowest Prices and Trade Volumes