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On July 16, 2021, China launched the world's largest carbon trading market, a landmark in the country's efforts to go green. At the "International and Domestic Carbon Markets and Carbon Sink Economy Conference" held on September 7, 2021, speeches were given by professionals in this field to introduce the national carbon market in terms of trading volume and trading subjects, and the trends in the future.
Mr. Lai Xiaoming, Chairman of Shanghai Environment and Energy Exchange, said that despite the accelerated launch of China's carbon market and construction of the market's mechanism, the trading volume of the national carbon market does not perform very well in general.
Mr. Mei Dewen, General Manager of Beijing Green Exchange, introduced the domestic and international emission reduction markets. He said that China's emission reduction market needs to focus more on the marketization of trading subjects, financialization of trading products and internationalization of trading regulation. The active voluntary emission reduction standards internationally include CAR (Climate Action Reserve), ACR (American Carbon Registry), VCS (Certified Emission Reduction Standard), GS (Gold Standard), CDM (Clean Development Mechanism) and China's CCER (Certified Voluntary Emission Reductions). Carbon markets require restructuring in essential, which is complex and difficult. Mr. Mei also expressed his hope that China's carbon market might become a standard international market in the future. He stressed that the most important value of the CCER market is to promote the development of new energy industries and to facilitate low-cost and high-efficiency compliance.
Now that China has established a unified national carbon market, the next step is to form a more efficient carbon market to help smooth the low-carbon transition. Duan Maosheng, deputy director of the Institute of Energy and Environmental Economics at Tsinghua University and director of the China Carbon Market Research Center, stressed that the carbon market is a quantity-based instrument, and the market needs to have a strong carbon price signal, which is very important not only for high-emission enterprises, but also for financial institutions.
In order to reach the carbon peak and neutrality goals, China needs to adjust the carbon market design accordingly. For example:
Including more industries, such as building materials industry, non-ferrous industry, and steel industry into the national carbon market;
Setting the total quantity based primarily on the intensity of CO2 emissions, with absolute totals consistent with national and industry carbon peak goals;
Improving the method of free allocation of carbon market allowances and introducing an auction method;
Strengthening market regulation and control.
