PetroChina International wins first carbon credits traded on Japan's stock exchange

PetroChina International, the global trading arm of national oil company PetroChina, said late Oct. 14 that it has won the first physically traded Japanese carbon credits, or J-credits, transacted on Tokyo Stock Exchange's new carbon trading platform.

The announcement underscores the participation of PetroChina, a subsidiary of state-owned China National Petroleum Corp, one of the world's largest oil and gas companies, in Japan's domestic carbon market, which is among the first initiatives by a developed country in Asia to establish a standardized carbon marketplace.

On Oct. 11, PetroChina International's Japanese branch received a transaction confirmation email with a serial number 1 from the Japan Exchange Group, or JPX, which operates the Tokyo Stock Exchange, indicating it had executed the first set of trades, according to the statement.

PetroChina International said it had been making preparations to participate in Japan's first carbon trading platform much before the launch, with the setting up of a specialized team, understanding the exchange's carbon trading rules and familiarizing itself with trading strategies.

The state-run oil and gas trader said it was actively developing a global pool of carbon assets, and accumulating the necessary experience to conduct more extensive activities in carbon credit trading globally, and the transaction on TSE was part of its plan.

"The Japanese subsidiary will take this transaction as an opportunity to further explore the Northeast Asian market, actively plan for carbon, electricity and renewable businesses, and contribute to PetroChina International's green transformation," the statement said.

PetroChina International said the natural gas team of its Japanese subsidiary took the lead in the carbon credit transaction, but did not disclose the types, trade volumes and settlement prices of J-credits traded by them.

The company is an active trader in the LNG space in the Singapore commodity trading hub, transacting both physical LNG cargoes as well as LNG derivatives. It has been growing its global LNG portfolio and is part of the wave of Chinese oil and gas companies that have been steadily increasing their trading footprint across commodities.

PetroChina International has also traded carbon-neutral LNG cargoes. In 2021, it received its first carbon-neutral LNG cargo at Dalian port after signing a term contract for carbon-neutral LNG supply with Shell.

On Oct. 11, TSE, part of JPX, kicked off exchange-based trading of J-credits, which are issued by a domestic registry, certifying emission reductions within Japan.

Prior to the launch of this exchange-based marketplace, J-Credits were traded either over the counter or through government auctions. The exchange-based trading, with price transparency and standardized trading procedures, are expected to better accommodate international investors, especially trading professionals.

On the opening day, prices of J-Credits were in a range of Yen 2,480-9,900/mtCO2e ($16.68-$66.57/mtCO2e) range, depending on project types. The most expensive J-credits were generated from forest sink projects, in a range of Yen 7,000-9,900/mtCO2e, S&P Global Commodity Insights reported earlier.