CEEP-BIT: Review and Outlook of China's Carbon Market (2022)

The China Carbon Market Review and Outlook (2022) points out that the overall operation of the national carbon market is currently stable. As of the end of 2021, the cumulative trading volume of carbon emission allowances (CEA) in the national carbon market reached 179 million tons, with a turnover of 7.684 billion yuan. The cumulative trading volume of carbon emission allowances in the seven pilot carbon markets, including Beijing, Tianjin, Shanghai, and Chongqing, reached 483 million tons, with a turnover of 8.622 billion yuan. The pilot carbon market is expected to continue to run in parallel with the national carbon market for a period of time, and gradually transition to the national carbon market.

Data shows that since the national carbon market started online trading on July 16, 2021, it has been running for a total of 114 trading days, and the compliance completion rate in the first compliance cycle has reached 99.5%, which is a good situation. Its daily average transaction price fluctuates in the range of 40-60 yuan/ton, basically remaining stable. However, the total quota of the national carbon market is about 4.5 billion tons. According to the current trading volume, its market transaction turnover rate is about 3%. Compared with the 417% turnover rate of the most active EU carbon market in the world, the national carbon market is still in its early stages of development, and there is still much room for improvement in market activity.

In terms of pilot carbon markets, the "China Carbon Market Review and Outlook (2022)" pointed out that during the period of 2020-2021, the operating results of the seven pilot carbon markets were different. Among them, the carbon markets in Guangdong and Hubei performed well, and the Chongqing carbon market performed the worst. This is related to the design of Chongqing's quota allocation mechanism and carbon emission trading system. Its trading subjects are relatively single, the inclusion threshold is high, and relatively few companies are included. With the implementation of the de-capacity policy, many traditional industrial enterprises have been closed one after another, making fewer and fewer companies eligible for trading conditions. At present, there are still large differences in the quota allocation mechanism, MRV (quantification and data quality assurance process of carbon emissions) supervision mechanism and default penalties of different carbon markets.

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