China Carbon Permits Trade 22% Below Europe’s on Market Debut

By Benjamin Haas & Mathew Carr – Jun 18, 2013 China traded its first carbon dioxide permits for 22% less than today’s price in Europe as the nation inaugurated the Shenzhen Emissions Exchange as part of its plan to limit heat-trapping gases linked to climate change . The permits were priced from 28 yuan to 30 yuan ($4.90) a metric ton, according to Chen Hai’ou, chief executive officer and president of the exchange. That’s compares with 4.71 euros a ton ($6.30) today for European Union permits on London ’s ICE Futures Europe exchange, the world’s biggest carbon market by traded volume. Shenzhen, the first of seven test markets to start in the world’s most populous nation, is one of China’s Special Economic Zones designed to promote market policies. Its new cap and trade program will initially include 635 companies. The Shenzhen exchange traded 21,112 tons of carbon in eight transactions valued at 613,236 yuan, according to a video presentation at today’s opening ceremony. “The meager volume and pre-approved price level of today’s trades is likely to characterize the initial stages of all of China’s seven ETS pilots,” said Richard Chatterton, a London-based analyst for New Energy Finance. China had planned to start all seven pilot programs this year, with Shenzhen’s market followed by Beijing, Shanghai , Guangdong, Tianjin, Chongqing and Hubei. Some of the markets may start in 2014, Xie Zhenhua , vice president of the National Development and Reform Commission, said at today’s ceremony in Shenzhen. He didn’t disclose which exchanges are behind their original schedule. Buying Permits The new markets are set to regulate 800 million to 1 billion tons of emissions by 2015 in the world’s biggest cap-and-trade program after Europe’s, according to Bloomberg New Energy Finance. PetroChina Co., China’s biggest oil producer, and Hanergy Holding Group Ltd., a renewable-energy company, each bought 10,000 allowances today from Shenzhen Energy Group, according to the video presentation. PetroChina paid 28 yuan for its permits, while Hanergy paid 30 yuan, according to the presentation. Shenzhen City Bao’an Water Services Co. and five individuals also bought permits. The names of individuals were not disclosed. For Related News and Information: To contact the reporter on this story: Benjamin Haas in Hong Kong at bhaas7@bloomberg.net Taylor Scott International