China emissions prices surge as ETS starts operations
Prices of China emission allowances (CEAs) have risen sharply on the first day of trading in the country's national emissions market.
China's emissions trading scheme (ETS) started operations at 9.30am local time in Shanghai today, coming on line following years of preparations and several weeks later than planned. The market opened at 48 yuan/t (€6.30/t or $7.40/t) of CO2 equivalent (CO2e) and rose as high as Yn52.8/t, the maximum 10pc increase allowed under market rules.
Prices closed up by 6.7pc at Yn51.23/t. Total trading volumes were 4.1mn t for a value of Yn210mn.
The prices are well below those in the EU ETS, where December 2021 allowances traded last week at €54.25/t CO2e, around eight times higher than today China's ETS closing price at the equivalent of €6.70/t.
About 4.5bn t/yr of CO2 emissions are covered in the initial stage of the ETS, making it the world's largest such trading scheme, Huang Runqiu, China's environment and ecology minister, said at today's opening ceremony.
The ETS will initially cover only the thermal power sector, with around 2,200 coal- and gas-fired power generation plants included in the scheme. The first compliance cycle ends on 31 December this year covering emissions allowances for 2019-20.
Ten state-owned companies, accounting for a large proportion of the emissions covered, participated in today's trading. These comprised power utilities Huadian, Huaneng, Datang, China Energy Investment, SPIC and CR Power; provincial energy firms Shenergy and Zhejiang Energy; and state-controlled oil and gas giants Sinopec and PetroChina, which have captive power plants.
Some state-owned power firms have set up carbon asset management teams to represent their multiple power generation plants across the country, and to trade allowances in the ETS on their behalf.
Sinopec trading arm Unipec and PetroChina International are representing the captive power plants at the two companies' refineries and oil fields. The two firms have a total of 31 power subsidiaries covered by the ETS entities.
Market participants are not expecting much liquidity in the ETS any time soon, as only the 2,200 entities with physical power plants are allowed to participate. There is not yet any clear timeline for third-party traders, such as financial firms and independent carbon asset management companies, to enter the market.
China has been operating pilot emissions trading schemes since 2013 in provinces and cities including Beijing, Tianjin, Shanghai, Chongqing, Guangdong, Hubei and Shenzhen.
Total traded volumes in these pilot projects were 480mn t as of June, valued at Yn11.4bn ($1.76bn), while the weighted average carbon price in the past two years was around Yn40/t of CO2e, according to environment and ecology ministry (MEE) figures.
The MEE plans to expand the ETS to include other emissions-intensive sectors including steel, nonferrous metals, cement, petrochemicals, chemicals, paper and aviation in the longer term.
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Canada’s TMX pipeline ready to move crude: Update
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New US rule may let some shippers swap railroads
New US rule may let some shippers swap railroads
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First TMX cargo booked on Aframax to China
First TMX cargo booked on Aframax to China
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Canada’s TMX awaits regulator OK on eve of service
Canada’s TMX awaits regulator OK on eve of service
Calgary, 30 April (Argus) — Regulatory approvals needed for the 590,000 b/d Trans Mountain Expansion (TMX) crude pipeline in western Canada are coming down to the wire on the eve of entering commercial service. The major crude pipeline last week maintained its plan to start commercial operations on 1 May, but three filings remain under assessment by the Canada Energy Regulator (CER) with less than 24 hours to go. Federally-owned Trans Mountain requires all sections, called spreads, of the pipeline to receive regulatory blessing before the line can be put into service. Outstanding are applications pertaining to Spread 5B Part 3, which runs from kilometer post 1064 to 1067, according to CER's website. The segment is near Hope, British Columbia, about 140 kilometers (87 miles) east of the line's terminus in Burnaby. The three applications concern piping, valves and other components at two pipeline inspection gauge (pig) traps and the mainline pipe between the two traps. The traps were added for safety assurance when the operator was allowed by CER to use a smaller diameter pipe as part of the Mountain 3 deviation. Mountain 3 was the last segment of the pipeline to be constructed because of delays relating to difficult terrain while tunneling. TMX will nearly triple the existing 300,000 b/d Trans Mountain system that connects oil-rich Alberta to the docks in Burnaby, British Columbia. Importantly, the line will provide Canadian oil sands producers with a significant export outlet without having to first go through the US. The "golden weld" marking the end of construction occurred on 11 April, according to Trans Mountain. A group of shippers last week expressed concern that TMX would not be ready for commercial service by 1 May. Spreads 6, 7A and 7B stretching from kilometer post 1075 to 1180 were approved earlier in the week, bringing the total number of approvals up to 39. The expansion was first conceived more than a decade ago with the intention of being operational by late-2017, but that date slipped amid cost overruns and repeated delays. By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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