China ETS: Emissions prices settle at record low

Market: Coal, Emissions
20/08/21

Prices in China's emission trading scheme (ETS) have fallen to the lowest level since the market started trading last month, while trading volumes also dropped this week.

Prices settled at 49 yuan/t ($7.50/t) of CO2 equivalent (CO2e) today, below the Yn51.23/t settlement on the first trading day on 16 July.

Total volumes were 1.42mn t of CO2e this week, including 22,012t of open-bid trades and 1.4mn t of bulk agreements. The volume of open-bid trades has now fallen for five straight weeks.

The weighted-average open-bid price was Yn50.54/t this week, 7.6pc lower than a week earlier. The average price for the bulk agreement transactions was Yn45/t, down by 10.5pc from last week.

The ETS is a new initiative for China, has many shortcomings and needs to be improved, Huang Runqiu, China's ecology and environment minister, said this week. "We must be cautious and steady in the progress," he said.

The environment ministry is the government body overseeing the ETS and China's climate change policies.

More details on regulation of emissions trading are likely to be published soon, Huang said. China will set up a voluntary emissions reduction mechanism and include more emissions entities and third-party traders in the ETS to help increase market activity.

China certified emissions reduction (CCER), a voluntary emissions reduction programme that typically covers forestry and renewable power projects, has not yet been adopted by the national ETS. CCER trading has been included in the pilot ETSs that operate in seven cities and provinces, with total CCER volumes of 1.94mn t last week.

China's national forestry and grassland administration is pushing ahead with a trading scheme for forestry and grassland carbon sinks, officials said in a briefing today. The ministry will encourage forestry projects to participate in the national ETS as part of the carbon offset mechanism.

Weekly policy review

China's top economic planning body the NDRC has issued new warnings to some local governments that missed targets to control energy intensity in the first half of this year.

Nine provinces or regions — Guangdong, Jiangsu, Yunnan, Fujian, Shaanxi, Guangxi, Ningxia, Qinghai and Xinjiang — have been issued code red warnings after increasing their energy intensity in January-June. These provinces must suspend approvals of new energy-intensive projects for the rest of the year, the NDRC said in a statement on 17 August.

The warnings could encourage some provinces to consider power rationing over the high demand winter season.

China ETS volumes, prices

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EU sees no credibility issue in 2040 GHG target delay

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New tariffs could upend US tallow imports

03/04/25

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03/04/25

New tariffs could upend US tallow imports

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The majority of those imports last year came from Brazil, which until now has faced a small 0.43¢/kg (19.5¢/lb) tariff, and from Australia, which was exempt from any tallow-specific tariffs under a free trade agreement with US. But starting on 5 April, both countries will be subject to at least the new 10pc charge on foreign imports. There are some carveouts from tariffs for certain energy products, but animal fats are not included. Some other major suppliers — like Argentina, Uruguay, and New Zealand — will soon have new tariffs in place too, although tallow from Canada is for now unaffected because it is covered by the US-Mexico-Canada free trade agreement. Brazil tallow shipments to the US totaled around 300,000t in 2024, marking an all-time high, but tallow shipments during the fourth quarter of 2024 fell under the 2023 levels as uncertainty about future tax policy slowed buying interest. Feedstock demand in general in the US has remained muted to start this year because of poor biofuel production margins, and that has extended to global tallow flows. Tallow suppliers in Brazil for instance were already experiencing decreased interest from US producers before tariffs. Brazil tallow prices for export last closed at $1,080/t on 28 March, rising about 4pc year-to-date amid support from the 45Z guidance and aid from Brazil's growing biodiesel industry, which is paying a hefty premium for tallow compared to exports. While the large majority of Brazilian tallow exports end up in the US, Australian suppliers have more flexibility and could send more volume to Singapore instead if tariffs deter US buyers. Export prices out of Australia peaked this year at $1,185/t on 4 March but have since trended lower to last close at $1,050/t on 1 April. In general, market participants say international tallow suppliers would have to drop offers to keep trade flows intact. 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