China's carbon trading market celebrates its third anniversary, marking significant progress in promoting greener power generation. Launched three years ago, the carbon emission rights trading market has become a core policy tool for the country's goals of carbon peaking and neutrality, according to the Chinese Ministry of Ecology and Environment.
The government sets a carbon emission cap and allocates quotas to companies, incentivizing them to reduce emissions. Companies can sell surplus quotas for profit or purchase additional ones if needed. As of Monday, over 460 million tonnes of carbon emission quotas, equivalent to 27 billion yuan (about $3.7 billion), have been transacted in the market.
Since its inception, the price of carbon dioxide per tonne has surged from over 40 yuan (approximately $5.5) to around 90 yuan (about $12.4), with the historical highest price exceeding 100 yuan (around $13.8). This increase in carbon prices has encouraged more than 2,000 coal-fired power enterprises to implement energy conservation measures and reduce emissions.
\"The higher the price, the higher the cost for enterprises to purchase carbon emission rights quotas. For some enterprises with surplus quotas, they can obtain higher profits by selling quotas. The fluctuation of prices could motivate or influence the decision-making of enterprises,\" said Yu Xiang, director of the Department of Climate Change Economics Research at the Research Institute of Eco-Civilization under the Chinese Academy of Social Sciences.
Currently, all companies participating in the market are coal-fired power generation companies. However, more energy-intensive industries, such as steelmaking and construction, are expected to join the market this year. Experts also hope that technological advances will gradually lower the costs for companies to reduce emissions.
\"Building a national carbon market is a major institutional innovation that uses market mechanisms to control and reduce greenhouse gas emissions and promote the green and low-carbon development of the economy and society. It is also an important policy tool for actively and steadily promoting carbon peak and carbon neutrality. It has become an important window to show China's active response to climate change,\" said Xu Huaqing, chief scientist of the National Center for Climate Change Strategy Research and International Cooperation.
Reference(s):
China's carbon trading market helps power companies become greener
cgtn.com
