Regarding the next step of expanding the national carbon emission rights trading market (hereinafter referred to as the "national carbon market"), Zhao Yingmin, Vice Minister of the Ministry of Ecology and Environment, revealed at a regular policy briefing held by the State Council Information Office that a special study on the expansion of the national carbon market has been carried out. The drafting of relevant technical documents has been basically completed, and the Ministry of Ecology and Environment is actively promoting efforts to realize the first expansion of China's carbon emission rights trading market as soon as possible.
Since its official launch in July 2021, the national carbon market has successfully completed two compliance cycles: the first compliance cycle was from 2019 to 2020, and the second was from 2021 to 2022. At present, the national carbon emission rights trading market covers an annual carbon dioxide emission of about 5.1 billion tons, with 2,257 key emission units included, making it the world's largest carbon market covering greenhouse gas emissions.
Data from the Ministry of Ecology and Environment shows that compared with the first compliance cycle, market activity in the second cycle has significantly increased. By the end of last year, the cumulative trading volume of the national carbon emission rights trading market reached 440 million tons, with a turnover of about 24.9 billion yuan. The trading volume in the second compliance cycle increased by 19% compared with the first, and the turnover increased by 89%. The carbon price has shown an overall steady upward trend, rising from 48 yuan per ton at the launch to about 80 yuan per ton, an increase of about 66%. In the second compliance cycle, enterprises' enthusiasm for participating in transactions significantly increased, with 82% of enterprises participating in transactions, an increase of nearly 50% compared with the first compliance cycle.
Despite significant breakthroughs, China's carbon market is still generally a new thing. "The national carbon market was launched in July 2021, and in less than three years, there are still many areas in its construction and operation that need exploration and innovation," said Zhang Yaobo, Director of the Fourth Bureau of Legislation of the Ministry of Justice. The recently released *Interim Regulations on the Administration of Carbon Emission Rights Trading* focused on building a framework system for carbon emission rights trading management during its formulation, providing basic guidelines for the operation of the carbon market to ensure its standardization and order. At the same time, relevant institutional designs maintain necessary flexibility to leave sufficient space for future exploration and development.
When talking about the much-watched expansion of the carbon market, Zhao Yingmin introduced that China's carbon emissions are mainly concentrated in key industries such as power generation, steel, building materials, non-ferrous metals, petrochemicals, chemicals, papermaking, and aviation. These eight industries account for about 75% of China's carbon dioxide emissions. Incorporating high-emission industries into the national carbon emission rights trading market as early as possible can minimize the cost of carbon reduction for the whole society, thereby helping to achieve China's "dual carbon" goals.
Zhao Yingmin revealed that except for the power industry, although the other seven industries have not been included in quota control, their carbon emission accounting, reporting, and verification have been carried out. The Ministry of Ecology and Environment is actively promoting efforts to realize the first expansion of China's carbon emission rights trading market as soon as possible.
"Carbon emission control and management is a new thing for government departments, industries, and key emission units. The Ministry of Ecology and Environment will adhere to the principle of incorporating industries one by one as they mature, fully learn from and utilize existing carbon emission management systems and experience, strengthen the institutional construction and data management of carbon emission management for industries to be included, so that key emission units in these industries can meet the management requirements of the carbon market after being included," Zhao Yingmin said.
Source: Economic Reference Network
