Carbon allowance refers to the greenhouse gas emission quota allocated to an enterprise by ** or its authorized agency according to the emission control target within a specified period of time. It is a policy tool used to help meet the goal of reducing greenhouse gas emissions. If a company's actual carbon emissions are less than the allocated allowance within the range of the allocated allowance, then they can maximize the cost benefit of the excess allowance. In short, a carbon allowance is a quota required by a company to participate in carbon emissions trading, and it represents the total amount of greenhouse gases that a company can emit in the atmosphere in a specific period, usually calculated in terms of each ton of carbon dioxide equivalent.
The main participants in the carbon trading market are as follows:
1.Key emitting entities: According to China's Interim Regulations on the Administration of Carbon Emission Trading, key emitting enterprises refer to enterprises, institutions and other organizations whose annual carbon emissions reach a certain scale. These units are usually enterprises in industries with high energy consumption and high emissions, such as power generation, steel, cement, chemicals, etc.
2.Non-key emitting entities: In addition to key emitting enterprises, other enterprises, institutions and individuals can also participate in carbon emission trading, but their trading activities are subject to stricter restrictions.
3.Carbon emission allowance registration agency: responsible for the registration, registration and management of carbon emission allowances, to ensure the accurate, safe and efficient operation of carbon emission allowances.
4.Emissions trading institutions: provide a platform for carbon emission trading, responsible for the organization, management and supervision of trading, and ensure the openness, fairness and impartiality of trading.
5.Investors and traders: including various investment institutions, individual investors and professional traders, who buy and sell carbon emission credits in the market to achieve investment returns or hedge risks.
6.*Regulatory agencies: such as the competent department of ecology and environment, are responsible for supervising and managing the carbon emission trading market to ensure the standardization of market order and the legality of trading activities.
7.Carbon reduction project developers: They earn carbon credits through the development of emission reduction projects (e.g. renewable energy, forest planting, etc.), which can be used in the carbon market**.
8.Third-party service providers, such as consulting services and research institutions, provide professional services such as policy consultation, transaction planning, and data verification for all parties involved in the carbon market.
In the carbon trading market, all participants realize the flow and allocation of carbon emission rights through the purchase and allocation of carbon emission rights, and then promote the control and emission reduction of greenhouse gas emissions. Through the market mechanism, the carbon trading market provides enterprises with the impetus to reduce emissions, and also provides investors with new investment channels to jointly promote green and low-carbon development.
As of 2023, China's carbon trading market has become the world's largest carbon market. Here are some of the current status of China's carbon trading market:
Market size and growth: Since the official launch of the National Emissions Trading Market (NERC) in July 2021, China's ETS has made significant progress. By the end of 2023, the national carbon market has covered 2,257 power generation companies, with a cumulative carbon emission allowance of more than 4400 million tons, with a turnover of more than 24.9 billion yuan, and an average comprehensive transaction price of 5643 yuan ton, about 32% higher than the average comprehensive transaction price of the first performance cycle.
Sector coverage and expansion: The national carbon market will enter its third compliance period in 2024, during which the cement and electrolytic aluminum industries will be included. In the section.
In the first and second compliance periods, only one sector of thermal power was included in the national carbon market. During the 14th Five-Year Plan period, the industry expected that all eight energy-intensive industries (power, petrochemicals, chemicals, building materials, iron and steel, nonferrous metals, papermaking, and aviation) would be included in the national carbon market. It is understood that in 2024, it is expected that the cement and electrolytic aluminum industries will be virtually included in the national carbon market, and there is currently no timetable for the inclusion of other industries.
With the implementation of the Interim Regulations on the Administration of Carbon Emission Trading, China's carbon trading market will further strengthen supervision and management, improve market transparency, and ensure data quality, so as to provide a clearer legal guarantee for carbon emission trading.
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