China Carbon Market Weekly Update - 2 September 2024

Week at a Glance (August 26, 2024 – August 30, 2024)

•  Activity in China's national Carbon Emissions Allowance (CEA) market dropped significantly to end the week with a total volume of 1.5 million tonnes, although it still remained well above the top 25% of 2024 weekly volumes. The market has not been able to produce two consecutive weeks of increasing volumes since mid-June. Open trades accounted for nearly 30% of total volume, close to the 2024 average and higher than the historical 17.2%.

• Open trade prices on the CEA market closed the week at 93.44 yuan ($13.14) per tonne, up 1% from the previous week and their highest in 10 weeks. The volume-weighted average price of all of the current week’s trades was 83.31 yuan (US$11.71) per tonne.

• Activity across the nine regional China Certified Emission Reductions (CCER) markets surged to 151.7 thousand tonnes on account of Sichuan’s volume of over 150 thousand tonnes. This combined volume is well over the 2024 weekly median of 111.8 thousand tonnes, but still lower than the average of 231 thousand tonnes. The CCER markets have seen a sharp volume decline beginning in early June.

Carbon Market Update (August 26, 2024 – August 30, 2024)

Activity in China's national Carbon Emissions Allowance (CEA) market dropped significantly to end the week with a total volume of 1.5 million tonnes, although it remained well above the top 25% of 2024 weekly volumes. The market has not been able to produce two consecutive weeks of increasing volumes since mid-June. Both open and block trades decreased. Open trades accounted for nearly 30% of total volume, close to the 2024 average and much higher than the historical 17.2%.

Among the weekly total volume, the 2019-2020 vintage saw 45.7 thousand tonnes, the 2021 vintage registered 33.3 thousand tonnes, and the 2022 vintage had 1,402 thousand tonnes.

Open trade prices closed the week at 93.44 yuan[1] ($13.14)[2] per tonne, up 1% from the previous week and their highest in 10 weeks. The volume-weighted weekly average open trade price increased nearly 2% to 94.13 yuan per tonne, also its highest in 10 weeks. The weekly volume-weighted average block trade price dropped over 1.4% to 78.87 yuan per tonne, continuing its weak showing from the previous week with a discount of over 16% from its open trade counterpart. The volume-weighted average price of all of the current week’s trades was 83.31 yuan (US$11.71) per tonne, slightly higher than the previous week thanks to the strength of open trade prices.

Activity across the nine regional China Certified Emission Reductions (CCER) markets surged to 151.7 thousand tonnes on account of Sichuan’s volume of over 150 thousand tonnes. This combined volume is well over the 2024 weekly median of 111.8 thousand tonnes, but still lower than the average of 231 thousand tonnes. The CCER markets have seen a sharp volume decline beginning in early June. By press time, Sichuan has not yet published trading value information on its 150 thousand tonnes of block trades for the week. Beijing’s open trades, on a thin volume, had an average price slightly lower than its CEA counterpart.

[1] Starting with the 26 February 2024 issue, this newsletter calculates our 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$ = 7.1124 RMB, middle price, August 30, 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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