China’s Carbon Market Primed for Launch as Shanghai Environment Energy Exchange Confirms Trading Methods

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China’s carbon emissions trading market is about to come online at the end of June, with a leading exchange in Shanghai providing new details on how transactions will be conducted.

On 22 June the Shanghai Environment Energy Exchange (上海环境能源交易所) (SEEE) issued a public announcement on nationwide carbon emissions trading, providing further details on how transactions will be conducted.

SEEE said that it would be responsible for work in relation to carbon trading accounts and operations prior to the establishment of a national carbon emissions trading body that oversee unified regulation of transactions.

With regard to trading of carbon emissions allowances (CEA), SEEE said that transactions should be implemented via its trading system, and would adopt methods including:

  • Agreement transfer – including listed agreement transfers and block agreement transfers.
  • One-way bidding.

The SEEE announcement further indicates that all trading parties can only engage in transactions by opening up a trading account, and that they may make multiple applications for accounts and trade operators depending upon their business requirements.

China’s national carbon market is expected to commence trading prior to the end of June. On 18 June Sun Jinlong (孙金龙), party secretary of the Ministry of Ecology and Environment, held a ministry meeting which stated that “the establishment of a national carbon emissions trading market is a major systems innovation for controlling and reducing greenhouse gas emissions and driving green and low carbon development, as well as an important means for achieving long-term peak carbon and carbon neutrality targets.”

In 2020 China set the ambitious carbon mitigation targets of achieving peak carbon by 2030 and carbon neutrality by 2060. The unveiling of the targets has since been followed by an aggressive push for the growth of green finance in China.

In March the Chinese government released the draft version of the “National Carbon Emissions Trading Provisional Administrative Regulations” (全国碳排放权交易管理暂行条例), as part of broader efforts to refine and improve the legal underpinnings for carbon emissions trading in China.

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