China keeps stable, healthy development of its national carbon emissions trading market

Photo taken on Nov. 9, 2021 shows a wind farm in Shuicha township, Taihe county, Ji’an, east
China’s Jiangxi province. (Photo by Deng Heping/People’s Daily Online)

Trading volumes on China’s national carbon emissions trading market hit one billion yuan
($156.63 million) as of Nov. 10 since the scheme officially started online operation on July 16.
Emission quotas for carbon dioxide stood at 23.44 million tonnes.

As the world’s largest carbon trading market, it involves a total of 2,162 power generation
companies, representing 4.5 billion tonnes of carbon dioxide emissions. The market is another
milestone marking China’s active efforts to cope with climate change and promote green

The national carbon emissions trading market is a policy tool that makes the right to carbon
dioxide emission tradable under market mechanisms. It is able to effectively optimize the
allocation of the scarce resources of emission quotas.

In practice, the market can urge enterprises to fulfill their responsibilities of emission reduction
and accelerate technological advancement and industrial upgrading through incentive
mechanisms, so as to achieve established goals at a lower cost. It is of vital significance for
peaking carbon dioxide emissions and achieving carbon neutrality.

Currently, most of the deals reached on the market come from the power generation industry, a
sector that ensures a very solid first step of the scheme. This industry is a major consumer of coals
and a primary source of carbon emissions. Besides, it boasts a high level of automation and
standardized data management. The early involvement of the sector in the carbon emissions
trading market can better achieve the goals of pollution and emission reduction. Therefore, China,
focusing on the power generation industry, initiated the trade of emission quotas among major
emitters earlier this year.

Multiple approaches must be taken to ensure the healthy operation of the carbon emissions trading
market, and first of all, authentic and accurate emission data must be acquired. China has carried
out data accounting, reporting and verification for years in the power generation, petrochemical,
steel and aviation industries, laying a solid foundation in this regard.

In the future, the carbon emissions trading market will be expanded to other industries. Data
management will be further enhanced, and complete data accounting, reporting and verification
systems established, to reinforce information disclosure and the construction of the credit system.

To maintain a reasonable price of carbon emissions on the carbon emissions trading market is an
important task. A low price could harm the positivity of enterprises to reduce emissions, while a
high price may put heavy responsibilities on them that are beyond their capabilities to shoulder.

China will further improve relevant institutional construction, introduce an offset mechanism and
a trading mechanism for carbon finance derivatives, guide market expectation, and gradually
enrich trade categories, methods and entities, to make the price of carbon emissions reasonable.

The construction of the carbon emissions trading market is complicated and systematic, which
cannot be achieved at one stroke, and China is making continuous exploration with its practices.

Starting from its energy structure and conditions for marketization, and enhancing systematic
planning to promote the stable and healthy development of the national carbon emissions trading
market, China will be able to advance the green transition of its economic and social development,
and lay a solid foundation for peaking carbon dioxide emissions and achieving carbon neutrality.

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