The market structure has surfaced
As an important starting point for promoting the realization of carbon peak and carbon neutrality goals, the construction of the national carbon market has entered the fast lane since the beginning of this year.Since December last year, the Ministry of Ecology and Environment (MEE) has intensively issued a series of documents such as carbon emission trading management measures, quota schemes, lists of key emitting entities, accounting and verification.On March 18, Lu Xinming, deputy director of the Department of Climate Change of the Ministry of Ecology and Environment, revealed that the construction of the national carbon market will be accelerated, and the legislative review of the "Interim Regulations on the Management of National Carbon Emission Trading" will be promoted, and strive to be introduced this year. Do a good job in the first compliance cycle of the power generation industry in the national carbon market, and strive to achieve the first online transaction in the carbon market in the first half of this year.According to the deployment of the Ministry of Ecology and Environment, the overall structure of the national carbon market, which is about to open, is gradually becoming clear."The construction of the national carbon market adopts the 'twin cities' model, that is, Shanghai is responsible for the construction of the trading system, and Wuhan, Hubei is responsible for the construction of the registration and settlement system." Liu Jie introduced that while Shanghai and Hubei are doing a good job in system construction, they are also responsible for the construction of national carbon trading institutions and national carbon registration and settlement institutions. In terms of equity structure, it will be led by the implementing agencies designated by Shanghai and Hubei respectively, and other provinces and cities will voluntarily participate in the joint construction.In terms of the overall design of the trading system, Liu Jie said that the system combines the experience of the pilot market and the construction of the domestic financial market trading system, and carries out the design of the program in accordance with the national trading system. At present, the basic construction of the system has been completed, and the docking and joint debugging test and simulated trading between the systems are being carried out as soon as possible, so as to prepare the system for the start of trading.At the same time, the registration system is ready to go. "At present, 2,225 key emitting power companies have basically completed the account opening work." The relevant person in charge of the Hubei Carbon Emission Trading Center said that the registration system undertakes the registration of carbon emission rights confirmation, transaction settlement, allocation and performance, etc., and is at the core of the national carbon emission trading support system, which plays a pivotal role in ensuring the smooth operation of the national carbon emission trading. "The national registration system settled in Hubei will bring together a large amount of financial capital and industrial capital, drive the rapid development of Hubei's green finance industry and low-carbon industry, and help Hubei build a national carbon trading center and carbon finance center." The person said.From the perspective of coverage, as a major carbon emitter, the power industry has become a market leader. "According to the overall arrangement of the country, the first batch of the national carbon market will start with the power generation industry, and during the '14th Five-Year Plan' period, it is expected that eight key energy-consuming industries such as petroleum, chemical industry, and building materials will be included in the carbon market." Liu Jie said that the allocation of allowances will make China's carbon market the world's largest carbon emission trading market.In order to enhance the activity of the national carbon market, product and service innovation has also become the focus of the next stage."We will gradually introduce carbon financial derivatives, such as carbon forwards, carbon futures and other financial product transactions, and promote the formation of a multi-level carbon market." Liu Jie revealed that the next step will be to explore the introduction of financial institutions into the market for trading, the future of the eight major industries to control the emission of about 8,000 to 10,000 enterprises, coupled with the introduction of investors, will bring a great boost to enhance market liquidity.According to the analysis of Guorong Securities, according to the current design scale forecast, the market value of the national carbon market may reach about 150 billion yuan, and the scale can reach about 600 billion yuan if the trading volume of derivatives such as carbon futures is taken into account. Local pilots coexist with the national marketAs early as 2011, the National Development and Reform Commission (NDRC) selected seven provinces and cities: Beijing, Tianjin, Shanghai, Chongqing, Hubei, Guangdong and Shenzhen to carry out carbon emission trading pilots.In 2016, the Fujian carbon market was launched.At present, a total of eight regions across the country are carrying out carbon emission trading pilots.According to the data, as of November 2020, the cumulative quota turnover of each pilot carbon market was about 430 million tons of carbon dioxide equivalent, with a cumulative turnover of nearly 10 billion yuan.Due to factors such as the inconsistent rules of the pilot carbon market, the different degrees of government intervention, and the large difference in the price of carbon allowances, it is urgent to establish a unified national carbon trading market.The Measures for the Administration of Carbon Emission Trading (Trial) issued by the Ministry of Ecology and Environment (MEE) stipulate that key emitting enterprises included in the national carbon emission trading market will no longer participate in the local carbon emission trading pilot market.With the national carbon market set sail on the horizon, where will the local pilot markets go from here?"The existing power generation enterprises in the Shanghai regional market will be directly included in the national carbon market, and the national market and the existing local pilot market will coexist." Liu Jie said that after the launch of the national carbon market, the regional carbon market will indeed have a certain diversion effect, but at present, the scope of the regional carbon market and the main threshold are more extensive than the national carbon market, and enterprises that are not included in the national carbon market can continue to participate in the regional carbon market and carry out carbon management through market-based methods."After the first batch of power industry starts trading, enterprises in the eight key industries will gradually be transferred from the pilot market to the national carbon market." The relevant person in charge of the Hubei Emissions Trading Center said that after the launch of the national carbon market, enterprises that have not yet been included in the national market industry will continue to trade in the pilot market. At present, enterprises in more than a dozen industries in the Hubei carbon market continue to operate in the regional market.In fact, while doing a good job of connecting with the national market, the pilot markets around the country are actively seeking reform, innovation and transformation and development."The national unified carbon market is gradually being established, and it is imperative to accelerate the reform and innovation of the existing regional carbon market." Liu Jie said that while serving the existing carbon emission trading work in the region, the Shanghai carbon market has made many new explorations in carbon finance, such as the launch of quota pledges, carbon funds, carbon trusts, as well as carbon lending businesses and carbon forward products. Local pilot projects can provide mature experience for the national carbon market.Zhu Ge, chairman of the Beijing Green Exchange, said that since the opening of the Beijing carbon emission trading pilot in November 2013, it has been running smoothly for more than seven years, and has initially established a regional carbon emission trading market with "perfect system, standardized market, active trading and strict supervision". The Beijing carbon market will continue to summarize and improve the experience of the pilot project, and continue to provide strong support for the construction and development of the national carbon market. The Beijing Green Exchange will make every effort to promote the construction of a voluntary emission reduction trading platform and the development of green finance, and contribute to the realization of the vision and goal of carbon peak and carbon neutrality for Beijing and the country through green financial services.The relevant person in charge of the Hubei Carbon Emission Trading Center said that in the next step, it will accelerate the construction of the national carbon market registration platform, build a "Hubei low-carbon industry comprehensive service platform", build the "Yangtze River International Low-carbon Industrial Park", initiate the establishment of a 20 billion yuan "Hubei Province Low-carbon Industry Development Fund", and build a multi-level green financial industry chain, so that the market-oriented mechanism can play the greatest role and help the win-win development of the environment and the economy. Accelerate the top-level designwholeWith the imminent launch of the national carbon market, it is imperative to further improve the system and rules and accelerate the top-level design.Sun Chuanwang, a professor at the China Energy Economics Research Center at Xiamen University, said that the construction of the national carbon trading market needs to be based on the top-level design of the government, and build a top-down emission control system, including the construction of unified market rules, the clarification of the regulatory functions of competent authorities at all levels under the unified system, and the establishment of a unified standardized accounting system."We should speed up the improvement of the legislative system and management mechanism, promote the introduction of interim regulations on the management of national carbon emission trading as soon as possible, and strengthen multi-departmental coordination." Liu Jie believes that in terms of enhancing the activity of the carbon market, the total amount of allowances and the allocation system should be reasonably determined, the total amount of national allowances should be considered in combination with the "3060 target", and a more reasonable quota allocation method should be adopted as much as possible, and a paid quota issuance mechanism should be introduced in a timely manner. It is necessary to further improve the trading market mechanism, start with quota spot trading, enrich trading varieties and trading methods, and expand the scope of market entities. Strictly manage the trading market and fully respect the law of market prices. It is necessary to strengthen the supervision of the trading market, explore the establishment of a transaction supervision mechanism and a risk management mechanism, pay attention to the coordination of various departments, and strengthen the supervision before, during and after the event.Wang Yao, dean of the International Institute of Green Finance at the Central University of Finance and Economics, suggested that the "total volume control trading" mechanism should be promoted to play a role, and on the basis of further improvement of the total amount related policies, the trading mechanism should be given full play to the role of the trading mechanism, and more stakeholders should be encouraged to participate, so as to form market liquidity and an effective carbon pricing mechanism, and give full play to the financial attributes of the carbon market.In terms of carbon pricing mechanisms and trading mechanisms, Peng Wensheng, chief economist at CICC, believes that the analysis based on green premiums shows that the combined carbon emissions of the high-emission and low-premium power and steel industries account for 62% of total emissions, and the carbon market pricing mechanism is more suitable. For low-emission, high-premium transportation, chemical and other industries, it may be more suitable to adopt a carbon tax pricing mechanism. He suggested that a carbon market trading mechanism with "auction + futures" as the core should be built, an auction-based trading mechanism should be implemented in the quota allocation link, and derivatives such as futures should be introduced in the quota trading link.Peng Wensheng said that some problems that may be brought about by a unified carbon market are worth paying attention to, such as the possibility that pollutants may flow with the geographical transfer of carbon emissions, which may lead to distortion of pollutant emissions; There may be incentive incompatibility between the national unified carbon market and environmental policies. How to achieve the coordinated promotion of the carbon market and electricity price reform may require a prudent price mechanism design, and consider additional research and the introduction of targeted regulatory policies. Therefore, while promoting carbon emission reduction through the carbon market, it is also necessary to jointly analyze the interaction effects of various relevant markets as soon as possible, assess the true cost of various regulatory content, and avoid the externalities that backfire on the regulation of a specific market.Source: China Securities Journal| Liu Liliang
Forward: Wind Energy Committee CWEA official account
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