China Carbon Market Weekly Update – 2 January 2024

Week at a glance (December 25, 2023 – December 29, 2023)

• Activity in China's national Carbon Emissions Allowance (CEA) market increased 59% from the previous week, ending the current week—and by extension 2023—with 6.5 million tons of total volume. The end of 2023 marked the conclusion of the second compliance period of China's ETS market. Relatively active trading during the last trading days of the year pointed to a final push by the remaining covered entities to secure required allowances. Among the 6.5 million tons of weekly total volume, 1.0 million came from the 2019-2020 vintage, 0.4 million from the 2021 vintage, and 5.0 million from the 2022 vintage.
• Open market transaction prices closed the week at 79.42 yuan ($11.21) per ton, 1.5% lower than the previous week but still the 4th highest weekly closing price ever. The volume-weighted average block trade price set a consecutive all-time high at 77.45 yuan per ton. The volume-weighted average price for all of the week’s trades also set a consecutive all-time high at 77.79 yuan ($11.01) per ton. The all-trades average prices of the 2019-20 and 2022 vintages stayed close to each other at near 78 yuan per ton while the 2021 vintage jumped to 79.70 yuan per ton.
• Activity across the nine regional China Certified Emission Reductions (CCER) markets increased to 226 thousand tons during the week, 19% higher than the previous week but far below the over 1 million tons seen for the four weeks between late November and mid-December. Only Tianjin and Sichuan had traded.

Carbon markets update (December 25, 2023 – December 29, 2023)

Activity in China's national Carbon Emissions Allowance (CEA) market increased 59% from the previous week, ending the current week—and by extension 2023—with 6.5 million tons of total volume. This volume was much higher than the 3 to 4 million range seen for the previous 5 weeks but lower than the 7 to 36 million range the market experienced from mid-September to mid-November, where over 90% of the covered entities completed their allowance submission obligations. The end of 2023 marked the conclusion of the second compliance period of China's ETS market. Relatively active trading during the last trading days of the year pointed to a final push by the remaining covered entities to secure required allowances. Increases in block trades accounted for all of the week’s volume surge. Among the 6.5 million tons of weekly total volume, 1.0 million came from the 2019-2020 vintage, 0.4 million from the 2021 vintage, and 5.0 million from the 2022 vintage.

Open market transaction prices closed the week at 79.42 yuan ($11.21[1]) per ton, 1.5% lower than the previous week but still the 4th highest weekly closing price ever. The weekly volume-weighted average price of open market transactions increased 3.2% from the previous week to 79.76 yuan per ton, the 3rd highest ever. The volume-weighted average block trade price set a consecutive all-time high at 77.45 yuan per ton, nearly 2% higher than the previous week. The volume-weighted average price for all of the week’s trades also set a consecutive all-time high at 77.79 yuan ($11.01) per ton, a nearly 2% increase from the previous week. The all-trades average prices of the 2019-20 and 2022 vintages stayed close to each other at near 78 yuan per ton while the 2021 vintage jumped to 79.70 yuan per ton.

Activity across the nine regional China Certified Emission Reductions (CCER) markets increased to 226 thousand tons during the week, 19% higher than the previous week but far below the over 1 million tons seen for the four weeks between late November and mid-December. Only Tianjin and Sichuan had traded.

Meaningful CCER price information was available from open market trades on the Sichuan market, which traded at a large discount over their national CEA counterparts.

[1] ?1 US$ = 7.0827 RMB, middle price, December 29, 2023, China State Administration of Foreign Exchange. The same exchange rate is used for all other values quoted in US dollars ($) in the newsletter.

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