China ETS: Trading volumes continue to rise

Market: Coal, Emissions
05/11/21

Trading volumes in China's national emissions trading scheme (ETS) continued to increase over 1-5 November, totalling 1.97mn t of CO2 equivalent (CO2e) settled and up by 80.7pc from a week earlier.

These included 214,437t of open bid trades, up by 25.1pc from the week of 25-29 October, with the weighted-average price slightly weaker by 0.3pc to 42.47 yuan/t ($6.63/t). Open bid trades settled at Yn42.69/t today, up from Yn42.41/t on 29 October.

Bulk agreement transactions totalled 1.76mn t, nearly double the 920,000t from last week, with the average price at Yn41.51/t.

The rising trading volume is responding to a nearing deadline for the first compliance cycle for the national ETS. China's ecology and environment ministry, which oversees the ETS, sent a notice on 26 October urging the emissions entities covered by the national trading scheme to clear their allowance deficits before 31 December.

Weekly policy review

China sets out a detailed plan to urge coal-fired power units to upgrade to less coal-intensive facilities, which will curb China's long-term coal consumption.

The plan, published by the country's main economic planning agency the NDRC, aims to cut average coal-based power consumption from its current level of 305.5g standard coal per kilowatt hour (g/kWh) to lower than 300 g/kWh. It indicates a reduction of at least 1.8pc coal-use per unit of power generation. The current coal-use level was calculated based on the average of power plants operating above the scale of 6,000kW as of 2020.

Northwest China's Ningxia region aims to reduce energy consumption per gross domestic product by 9.6pc, equivalent to 9mn t of standard coal, from 2021-23, while energy consumption per unit of industrial added value is projected to fall by 11.3pc over the same period.

The energy consumption curbs are expected to pressure production of several key ferro-alloys, including ferro-silicon, silico-manganese and calcium-silicon, as well as minor metals such as magnesium and manganese.

China ETS weekly 1-5 Nov (t/Co2e/Yn/t)

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