The National Development and Reform Commission (NDRC) is organizing a press conference on December 19 afternoon to announce the launch of the national carbon market, according to an authoritative source from the NDRC.
Li Gao, director of the Department of Climate of NDRC, said at a press conference on October 31 that the NDRC insisted on the orientation of using the carbon market as a tool for controlling greenhouse gas emissions, and avoided excessive speculations and excessive financial derivatives in the operation of the carbon trading system.
Even if only included in the electricity industry, China's carbon market will surpass the European Union to become the world's largest carbon market. Data from the China Carbon Forum shows that the total carbon dioxide emissions to be included in the national carbon emissions trading market in the power sector are estimated at 3.5 billion tons, accounting for 74 percent of the industry's total emissions.
Among all China’s policies on greenhouse gas emission reduction, carbon pricing has great potential for reducing emissions. Modeling analysis shows that by 2030 carbon emissions will be reduced by 27.49 percent over the business-as-usual reference scenario via carbon pricing (at a price of 63 yuan per tonne).
However, while the carbon trading system will play a role, it is not omnipotent. The research also points out that if China wants to climate goals, it must implement other complementary policies simultaneously.
The price of carbon in the pilot carbon trading market fluctuates, but most of the time it remained at 30 yuan per tonne. Jiang Zhaoli, deputy director of the Department of Climate Change of the NDRC, once said that the price of carbon will reach 200-300 yuan per tonne after 2020. Enterprises could not feel realistic pressure before that time.
By the end of 2011, China approved the pilot projects of carbon emissions trading in Beijing, Tianjin, Shanghai, Guangdong, Shenzhen, Hubei and Chongqing. As of September 2017, the cumulative quota volume of carbon emissions trading reached 197 million tons equivalent of carbon dioxide, valuing about 4.5 billion yuan.
So what impact will the launch of the national carbon market have on electricity companies? Zhang Junjie, director of Environmental Research Center at Kunshan Duke University, has told the 21st Century Business Herald that firstly, it will have impact on power generation costs. In order to reduce carbon emission, power generation companies will inevitably increase costs, including carbon costs, technical costs and management costs.
Secondly, it will affect power generation behavior. The amount and mode of allocation of carbon emissions of power enterprises will directly affect their power generation behavior. Enterprises need to adjust their production according to carbon prices.
Thirdly, it will affect energy structure. The carbon market will encourage power companies to adjust their energy structure. Enterprises will tend to generate electricity with renewable sources.
Fourthly, it will promote power generation enterprises to carry out technological innovation. The pressure of carbon emission reduction will promote the introduction, research and development of high-efficiency and low-coal consumption generating units to enhance power generation efficiency.
In addition, the change of power structure will have a certain impact on the planning and layout of power grid. From the point of view of electricity supply, carbon trading can help to promote the low-carbon clean and power structure.
He warned that the electricity sector needs to pay attention to the instability of the electricity supply. The national carbon market will increase the pressure on power companies to reduce emissions. The existing regulatory system on electricity prices may lead a mal-function of the market. The cost of carbon control cannot be transferred via electricity, which will affect its power supply decision. In addition, due to the relatively low degree of marketization of electricity prices, incentives for carbon emission reductions in the carbon market may be weak.
Market participants believe that in the long run, the transaction scale of China's carbon trading market will exceed one trillion yuan. It will create tremendous room for development for the new energy industry. The carbon asset management market will reach 10 billion yuan.
Yuan Jiahai, a professor of economy and management at North China Electric Power University, said that the national carbon market will not cause any significant cost pressure on the overall coal and power industry in the near future. An insider working in the carbon trading industry told reporters that in 2018, the national carbon market is mainly engaged in system construction, commissioning, account opening and simulated trading. Later, it will improve relevant mechanism system. The formal transaction is likely to start in 2019. So it has little effect on the industry in the short term.
However, the imagination of the market is already open. Yao Yao said that at present, China's carbon trading market has become the world's second largest carbon trading market. As of October 2017, the cumulative quota volume reached 406 million tons equivalent of carbon dioxide, with a total turnover of 10.2 billion yuan. The size of future market transactions will exceed one trillion yuan. The development of the carbon market will increase the carbon emission costs of traditional industries and encourage them to continuously reduce their carbon emissions through technological progress and investment in energy conservation. At the same time, CCER projects in the new energy industry will generate additional revenues and enhance their competitive advantages. In addition, the carbon asset management industry has a promising growth prospect. It is estimated that in the future, carbon asset development and carbon trading brokerage business will reach the scale of 10 billion yuan, while the carbon inventory market can reach more than 3 billion yuan.
(Translated by Coral Zhong)
Li Gao, director of the Department of Climate of NDRC, said at a press conference on October 31 that the NDRC insisted on the orientation of using the carbon market as a tool for controlling greenhouse gas emissions, and avoided excessive speculations and excessive financial derivatives in the operation of the carbon trading system.
Even if only included in the electricity industry, China's carbon market will surpass the European Union to become the world's largest carbon market. Data from the China Carbon Forum shows that the total carbon dioxide emissions to be included in the national carbon emissions trading market in the power sector are estimated at 3.5 billion tons, accounting for 74 percent of the industry's total emissions.
Among all China’s policies on greenhouse gas emission reduction, carbon pricing has great potential for reducing emissions. Modeling analysis shows that by 2030 carbon emissions will be reduced by 27.49 percent over the business-as-usual reference scenario via carbon pricing (at a price of 63 yuan per tonne).
However, while the carbon trading system will play a role, it is not omnipotent. The research also points out that if China wants to climate goals, it must implement other complementary policies simultaneously.
The price of carbon in the pilot carbon trading market fluctuates, but most of the time it remained at 30 yuan per tonne. Jiang Zhaoli, deputy director of the Department of Climate Change of the NDRC, once said that the price of carbon will reach 200-300 yuan per tonne after 2020. Enterprises could not feel realistic pressure before that time.
By the end of 2011, China approved the pilot projects of carbon emissions trading in Beijing, Tianjin, Shanghai, Guangdong, Shenzhen, Hubei and Chongqing. As of September 2017, the cumulative quota volume of carbon emissions trading reached 197 million tons equivalent of carbon dioxide, valuing about 4.5 billion yuan.
So what impact will the launch of the national carbon market have on electricity companies? Zhang Junjie, director of Environmental Research Center at Kunshan Duke University, has told the 21st Century Business Herald that firstly, it will have impact on power generation costs. In order to reduce carbon emission, power generation companies will inevitably increase costs, including carbon costs, technical costs and management costs.
Secondly, it will affect power generation behavior. The amount and mode of allocation of carbon emissions of power enterprises will directly affect their power generation behavior. Enterprises need to adjust their production according to carbon prices.
Thirdly, it will affect energy structure. The carbon market will encourage power companies to adjust their energy structure. Enterprises will tend to generate electricity with renewable sources.
Fourthly, it will promote power generation enterprises to carry out technological innovation. The pressure of carbon emission reduction will promote the introduction, research and development of high-efficiency and low-coal consumption generating units to enhance power generation efficiency.
In addition, the change of power structure will have a certain impact on the planning and layout of power grid. From the point of view of electricity supply, carbon trading can help to promote the low-carbon clean and power structure.
He warned that the electricity sector needs to pay attention to the instability of the electricity supply. The national carbon market will increase the pressure on power companies to reduce emissions. The existing regulatory system on electricity prices may lead a mal-function of the market. The cost of carbon control cannot be transferred via electricity, which will affect its power supply decision. In addition, due to the relatively low degree of marketization of electricity prices, incentives for carbon emission reductions in the carbon market may be weak.
Market participants believe that in the long run, the transaction scale of China's carbon trading market will exceed one trillion yuan. It will create tremendous room for development for the new energy industry. The carbon asset management market will reach 10 billion yuan.
Yuan Jiahai, a professor of economy and management at North China Electric Power University, said that the national carbon market will not cause any significant cost pressure on the overall coal and power industry in the near future. An insider working in the carbon trading industry told reporters that in 2018, the national carbon market is mainly engaged in system construction, commissioning, account opening and simulated trading. Later, it will improve relevant mechanism system. The formal transaction is likely to start in 2019. So it has little effect on the industry in the short term.
However, the imagination of the market is already open. Yao Yao said that at present, China's carbon trading market has become the world's second largest carbon trading market. As of October 2017, the cumulative quota volume reached 406 million tons equivalent of carbon dioxide, with a total turnover of 10.2 billion yuan. The size of future market transactions will exceed one trillion yuan. The development of the carbon market will increase the carbon emission costs of traditional industries and encourage them to continuously reduce their carbon emissions through technological progress and investment in energy conservation. At the same time, CCER projects in the new energy industry will generate additional revenues and enhance their competitive advantages. In addition, the carbon asset management industry has a promising growth prospect. It is estimated that in the future, carbon asset development and carbon trading brokerage business will reach the scale of 10 billion yuan, while the carbon inventory market can reach more than 3 billion yuan.
(Translated by Coral Zhong)
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