It is only one week before the expiration of the first performance period of the national carbon market. How to evaluate the performance of the first performance period of the national carbon market? How to further improve the system and rules of the national carbon market in the future? Under the goal of “double carbon”, how to connect power trading, energy right trading and carbon market? In this regard, the reporter of the Securities Times recently interviewed Zhang Jianhong, a senior engineer of China International Engineering Consulting Co., Ltd. In his opinion, whether the national carbon market has achieved results can not only depend on the performance rate. In the initial stage, it can be said that preliminary results have been achieved as long as there are no major design defects, reasonable carbon price and high performance rate to ensure the effectiveness of emission reduction.
Zhang Jianhong said that in the future, the system and rules of the national carbon market should be further improved from multiple dimensions, including improving the quota distribution system, clarifying the validity period of quotas, exploring the establishment of market maker system, introducing institutional investors as soon as possible, etc.
institutional investors should be introduced as soon as possible and the access threshold
Securities Times: during the first performance period of the national carbon market, what level do you expect the performance rate to reach? How much is the compliance rate before it can be said that the market-oriented mechanism of the national carbon market has achieved results?
Zhang Jianhong: in the first performance period, the performance rate is expected to reach more than 98%. To evaluate the effectiveness of the market-oriented mechanism of the national carbon market, we can not just look at the performance rate. In the initial stage, as long as there are no major design defects, the carbon price is basically reasonable and a high performance rate to ensure the effectiveness of emission reduction, we can say that we have achieved initial success, and then gradually reach a more ideal state through phased improvement and development. From the operation of the carbon market at this stage, it can be said that it has achieved initial success. However, except for the time before the performance date, most of the transactions are not active, which is far from reaching the original intention of the establishment.
Securities Times reporter: institutional investors have a high voice for admission. In your opinion, what changes can institutional investors bring to the national carbon market?
Zhang Jianhong: at the beginning of the national carbon market, only emission control enterprises participated in the transaction, while emission control enterprises mainly performed the contract. Only excess carbon quotas would be sold, which would be reluctant to sell to a large extent. This is also one of the reasons why the transaction is not active most of the time.
Institutional investors should be introduced into the national carbon market as soon as possible. Based on investment demand, institutional investors have a high trading frequency in the carbon market and a sensitive response to market price signals. It can be said that institutional investors play an irreplaceable role in activating the carbon market. In the past local pilot carbon market, institutional investors played a great role in the activity of the market. It is reported that the trading volume participated by institutional investors in the pilot carbon market in Shanghai accounted for more than two-thirds of the total trading scale.
Securities Times reporter: what measures need to be improved before institutional investors enter the market? How to avoid excessive financialization?
Zhang Jianhong: institutional investors need to improve the following measures before entering the market: first, improve the market circulation environment, such as clarifying tax incentives, so as to better provide long-term expectations of the carbon market; Second, cultivate qualified institutional investors and formulate access standards for qualified institutional investors as soon as possible.
Of course, excessive speculation should be avoided in carbon trading. It is suggested to strictly enforce the access threshold for institutional investors, prudently allow individual investors to enter, control the carbon quota positions of institutional investors and individual investors, and effectively guide all parties in the market to participate rationally.
Securities Times: in terms of the system and rules of the national carbon market, what aspects do you think should be further improved in the future?
Zhang Jianhong: the national carbon market should be further improved in the following aspects in the future: first, improve the quota distribution system, including introducing paid distribution, clarifying the effective period of carbon quota, and improving the provisions of carbon quota in accounting and tax treatment.
Second, explore the introduction of market maker system to improve market liquidity, but also help to find prices and stabilize the market.
Third, enrich trading varieties, not only learn from overseas experience, but also launch carbon futures and carbon derivatives; At the same time, we should innovate in specific product setting, transaction pricing and other links in combination with China’s actual situation.
Fourth, further strengthen basic capacity-building, improve data accuracy, and promote the disclosure of enterprise environmental information according to law.
Fifth, improve relevant supporting policies, such as making it clear that the income obtained through the carbon market will be given priority to climate projects and setting a minimum proportion; Learn from the experience of the pilot market, establish a carbon trading fund, give play to the guidance and leverage of the fund, and raise more social funds to participate in carbon trading.
CCER issued next year or restart the national Ccre market to accelerate the landing
Securities Times: during the performance period of the national carbon market, the activity of CCER market has also increased significantly. In your opinion, what is the development space of CCER in the future? Will the CCER market form a national CCER market in the future?
Zhang Jianhong: the filing and issuance of CCER project is currently suspended and is expected to restart next year. CCER project is still very important to the carbon trading market. New energy power generation, forestry carbon sequestration and marine carbon sequestration are expected to be included in the CCER market.
According to the calculation of 5% CCER offset ratio, the short-term and long-term demand for CCER in the national carbon trading market is about 200 million tons and 500 million tons respectively. In the future, CCER market has the conditions to form a national market. At present, the Ministry of ecological environment is organizing the revision of the Interim Measures for the administration of voluntary greenhouse gas emission reduction transactions, and the regulations on the administration of carbon emission trading have also been included in the list of administrative regulations to be formulated and revised, which have created an institutional environment for the construction of a National CCER market.
Securities Times reporter: it is said that Beijing Green Exchange has been approved as the national CCER market. Is there any latest progress?
Zhang Jianhong: in September this year, Hundsun Technologies Inc(600570) won the bid for the national greenhouse gas voluntary emission reduction trading system of Beijing Green Exchange, which is considered to accelerate the implementation of the national CCER market. The future carbon market spot trading includes two categories and three interrelated markets, one is a mandatory carbon quota market, one is a semi mandatory carbon offset market, and the other is a completely voluntary carbon neutralization market.
Securities Times: under the dual carbon goal, CCUs (carbon capture, utilization and storage) has also attracted much attention. In your opinion, what is the current development stage of CCUs in China? What is the future space?
Zhang Jianhong: there are more than 40 CCUs projects that have been put into operation or under construction in China and are still in the demonstration stage. Compared with foreign countries, China’s CCUs project started late, and there is no megaton carbon capture project in operation. At present, China mainly focuses on projects with a capture capacity of 100000 tons. The technology is not mature enough, the operation cost is high, and the economy needs to be further improved.
If China has to emit 2-2.5 billion tons of carbon dioxide every year in 2060, according to the current observation proportion, the natural process can absorb 1.3 billion tons. If the ecosystem absorbs 800 million tons, the remaining 400 million tons of carbon dioxide need to be neutralized through CCUs and other engineering storage technologies. It is suggested that the CCUs catch can be verified as carbon sequestration, brought into the national carbon market for trading, and the stable source of funds for CCUs project can be guaranteed through the carbon sequestration project compensation mechanism.
Securities Times: China has proposed to speed up the construction of a national energy trading market and strengthen the overall connection of power trading, energy trading and carbon emission trading. In your opinion, how can the national energy trading market be established in the future? How do electricity trading, energy right trading and carbon market connect?
Zhang Jianhong: the trading mechanism of energy use right is similar to the trading of carbon emission right. It guides social capital to increase investment in energy conservation and green technology through the trading of energy consumption. Industries and enterprises with high energy consumption and overcapacity are allocated a certain amount of energy use rights that can ensure reasonable output. The excess part must be supplemented by purchasing a corresponding amount of energy use rights, so as to force enterprises to carry out energy-saving technological transformation and increase investment in the development of green production.
In July 2016, the national development and Reform Commission issued the pilot scheme of paid use and trading system of energy rights, which proposed to carry out the pilot work of paid use and trading system of energy rights in Zhejiang Province, Fujian Province, Henan Province and Sichuan Province, and officially approved the pilot work scheme of paid use and trading of energy rights in the four provinces at the end of 2017. From the end of 2018 to the end of 2019, the above four places have officially started energy use right transactions one after another. But so far, the trading volume and volume of energy use rights are not large.
In the future, the synergistic coupling of energy right market, carbon market and power trading market can be considered. For example, energy enterprises need to pay costs in the energy right market and carbon market, while they can obtain benefits from selling electricity in the power trading market. Energy consuming enterprises can obtain benefits in the energy right market and carbon market by implementing energy-saving technological transformation, while they need to spend money to buy electricity in the power trading market. Therefore, the energy right market, carbon market and power market are often interrelated. The three markets need to form a perfect collaborative coupling mechanism in order to not only realize the energy conservation and emission reduction of enterprises, but also ensure the reasonable profits of enterprises, so as to support the construction of a green and low-carbon circular development economy system.
we can explore the trading mechanism to make it convenient for overseas funds to buy Chinese green assets
Securities Times: after the launch of the national carbon market, Guangdong proposed to build a carbon emission trading market in Dawan district to promote the pilot of carbon trading and foreign exchange; Hainan also proposes to build an international carbon emission trading place to connect the national carbon trading market with the international market. In your opinion, how should the internationalization process of the carbon market be built?
Zhang Jianhong: to promote the internationalization process of the carbon market, the first should be the globalization of standards. It is necessary to establish the measurement, certification standards and trading standards of green assets recognized by global investors, carbon financial institutions and carbon exchanges. While accelerating the integration with international standards, China should also strive to establish some standards that can lead the world.
Second, the globalization of capital transaction and circulation. In the future, China can explore the establishment of green channels and trading mechanisms, so that overseas funds can easily enter China’s exchanges to buy China’s green assets.
Third, the globalization of Carbon Asset issuance. Global trading not only includes China’s green assets, but also should attract overseas green assets to be listed on China’s exchanges.
Fourth, innovative service ability in line with international standards. China should not only learn from overseas experience in carbon futures and carbon financial derivatives, but also try to innovate in specific product design and transaction pricing in combination with China’s national conditions.
Securities Times: Article 6 of the Paris agreement aims to promote the construction of a global carbon market mechanism. Preliminary progress has been made this year. In your opinion, in what ways is it possible to establish a global carbon market mechanism in the future?
Zhang Jianhong: the convergence of the carbon market between different countries and regions needs to solve a series of complex problems such as laws, systems, policies, standards and technology. According to the statistics of the world bank, by 2020, there are 61 carbon pricing mechanisms implemented or under planning in the world, including 31 carbon emission trading systems and 30 carbon tax plans; It covers 46 countries and 32 sub national jurisdictions.
The future global carbon market mechanism may be established in many ways:
First, mutual recognition of carbon quotas. For example, emission control enterprises in Europe and America can purchase China’s carbon targets to offset carbon emissions, but it is difficult to achieve at present.
Second, carbon credit trading. Among them, carbon sink projects bear the brunt. Carbon sequestration projects have great potential to reduce emission costs and generate additional common benefits. Benefiting from people’s high attention to nature based solutions, the carbon credit of the forestry industry has also attracted attention. Over the past five years, 42% of the carbon credit market was funded by forestry. Traditional carbon credit trading activities in industrial gas, renewable energy and fugitive emission industries also occupy a large market share. In order to ensure the overall synergy, the global carbon market mechanism must improve information transparency and reach a consensus on the standards of carbon credit mechanism. However, at present, more and more regions, countries and regions begin to establish independent carbon credit mechanisms, which brings challenges to the synergy among mechanisms and the unification of the meaning of emission reduction. For the carbon credit mechanism, the key in the future is to ensure synergy and avoid double counting.
Third, the financing of capital flow. Foreign investors can participate in carbon market transactions in other countries.
(Securities Times)
