China Carbon Market Weekly Update - 10 September 2024

Week at a Glance (September 2, 2024 – September 6, 2024)

• Activity in China's national Carbon Emissions Allowance (CEA) market increased slightly, ending the week with a total volume of 1.54 million tonnes. A decrease in open trades was offset by an increase in block trades. Among the weekly total volume, the 2019-2020 vintage saw 1.8 thousand tonnes, the 2021 vintage registered 439.6 thousand tonnes, and the 2022 vintage had 1.1 million tonnes.

• Open trade prices closed the week at 97.65 yuan ($13.77) per tonne, jumping 4.5% from the previous week to their highest in more than 3 months. The weekly volume-weighted average block trade price increased over 8% to 85.48 yuan per tonne, but for the third week in a row remained at a discount of over 10% from its open trade counterpart. The volume-weighted average price of all current week trades was 87.65 yuan (US$12.36) per tonne, over 5% higher than the previous week.

• Activity across the nine regional China Certified Emission Reductions (CCER) markets decreased to 102.5 thousand tonnes. Only the Shanghai and Sichuan markets saw trades with the former accounting for nearly 95% of their combined volume. On September 2, the National CCER Registration and Information System published public notices for 29 new CCER projects. The total annual credits from these projects amount to about 9.7 million tons, with nearly 93% of these credits coming from offshore wind farms. The first batch of the new CCER credits from these projects could be available by April 2025.

Carbon Market Update (September 2, 2024 – September 6, 2024)

Activity in China's national Carbon Emissions Allowance (CEA) market increased slightly, ending the week with a total volume of 1.54 million tonnes. A decrease in open trades was offset by an increase in block trades. Open trades accounted for nearly 21% of total volume for the week, lower than they had been in the most recent six weeks but still higher than the historical 17.2%.

Among the weekly total volume, the 2019-2020 vintage saw 1.8 thousand tonnes, the 2021 vintage registered 439.6 thousand tonnes, and the 2022 vintage had 1.1 million tonnes.

Open trade prices closed the week at 97.65 yuan[1] ($13.77)[2] per tonne, jumping 4.5% from the previous week to their highest in more than 3 months. The volume-weighted weekly average open trade price increased nearly 2% to 95.85 yuan per tonne, its highest in 12 weeks. The weekly volume-weighted average block trade price increased over 8% to 85.48 yuan per tonne, but for the third week in a row remained at a discount of over 10% from its open trade counterpart. The volume-weighted average price of all current week trades was 87.65 yuan (US$12.36) per tonne, over 5% higher than the previous week thanks to the strengthening of block trade prices.

Activity across the nine regional China Certified Emission Reductions (CCER) markets decreased to 102.5 thousand tonnes, below the 2024 weekly median of 111.8 thousand tonnes. Only the Shanghai and Sichuan markets saw trades with the former accounting for nearly 95% of their combined volume. Meaningful price information is available from Sichuan, which had an overall average price slightly lower than its CEA counterpart.

On September 2, the National CCER Registration and Information System published public notices for 29 new CCER projects. The total annual credits from these projects amount to about 9.7 million tons, with nearly 93% of these credits coming from offshore wind farms. According to the Implementation Rules for the Validation and Verification of CCCER Projects, beginning from the publication of its public notice, a 200-day period is normally given for a project to complete its project validation and emission reduction verification processes. By this timeline, the first batch of the new CCER credits could be available by April 2025.

[1] Starting with the 26 February 2024 issue, this newsletter calculates its own daily overall market closing price using the volume-weighted average of traded CEA vintages. This replaces the closing price reported by the Shanghai Environment and Energy Exchange (SEEE), which is an equal-weighted average of the closing prices of all three CEA vintages. The closing price reported by the SEEE does not reflect market reality due to the frequent and vast volume differences among the vintages on any given day. For the same reason, this newsletter also records the daily high and low prices of open market transactions using the highest and lowest prices of any of the three vintages that have trades on the day, instead of the equal-weighted averages of the highest and lowest prices of all three vintages as reported by the SEEE.

[2] 1 US$ = 7.0925 RMB, middle price, September 6, 2024, China State Administration of Foreign Exchange. The same exchange rate is used for all other values quoted in US dollars ($) in the newsletter.

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