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At the beginning of 2021, the global carbon market can be described as good news: the Ministry of Ecology and Environment of China issued the "Management Measures for Carbon Emission Trading (Trial)", which officially opened the national carbon market; the EU emissions trading system started the fourth trading stage, and the EU carbon price Then it hit a record high. The industry generally believes that, driven by these favorable factors, the global carbon market may usher in a new round of development in 2021.
China's carbon market fully opened
On January 1, the first compliance cycle of China's carbon market was officially launched, and the first compliance cycle will end on December 31, 2021, involving 2,225 key emission units in the power generation industry. On January 5, the Ministry of Ecology and Environment formally issued the "Administrative Measures for Carbon Emission Trading (Trial)" (hereinafter referred to as the "Administrative Measures"), which further strengthened the control and management of greenhouse gas emissions, and accelerated the promotion of the country under the new situation. The construction of the carbon market provides a strong basis.
Zou Ji, CEO of the Energy Foundation and President of China Region, pointed out that the launch of the national carbon market is not only a staged progress in the construction of my country's carbon market, but also another important initiative in the field of emission reduction in recent times. "Previously, China has carried out carbon emission trading pilot projects in many places, and made a lot of preparations for opening a national carbon market." Zou Ji told reporters, "The infrastructure construction for carbon market management is always moving forward. Advance. The issuance of the "Management Measures" can be regarded as a milestone in the construction of China's carbon market. On the one hand, the introduction of the "Management Measures" makes carbon emissions trading rule-based; on the other hand, although the "Management Measures" The level of legal effect of the Measures is not the higher or highest effect expected before, but this is a beginning and lays a good foundation for future relevant legislation."
It is understood that since 2011, my country has carried out carbon emission trading pilot projects in 7 provinces and cities: Beijing, Tianjin, Shanghai, Chongqing, Hubei, Guangdong, and Shenzhen. Statistics show that as of November 2020, the pilot carbon market has covered nearly 3,000 key emission units in more than 20 industries, including electricity, steel, and cement. The cumulative quota transaction volume is about 430 million tons of carbon dioxide equivalent, and the cumulative transaction volume is nearly 100. 100 million yuan.
Zou Ji emphasized that the launch of my country's national carbon market is not only good for the further advancement of domestic emissions reduction, but also sent a positive signal to the international community and provided new support for global emissions reduction.
EU carbon price hits record high
On January 4, with the launch of the fourth trading phase of the EU Emissions Trading System (ETS), the EU carbon price once exceeded 34 euros/ton. Data show that on December 31, 2020, the European ICE Futures Exchange's carbon trading price closed at 32.72 euros/ton, and on January 4, the carbon trading price on the exchange once reached 34.25 euros/ton (about 41.37 US dollars) / Ton).
The industry analysis agency S&P Global Platts pointed out that the EU carbon price climbed to a high level at the beginning of the year, mainly because the EU carbon market suspended the supply of some trading allowances before, resulting in no new carbon emission allowances entering the market in the short term. The supply of carbon emission allowances exceeds supply, and carbon prices are therefore "rising."
In fact, since the second half of 2020, despite the impact of the new crown pneumonia epidemic, EU carbon prices have continued to rise and have repeatedly exceeded the 30 euro/ton mark.
Amy Bowe, head of carbon market research at Wood Mackenzie, believes that there are many reasons for the increase in EU carbon prices in 2020. "Including the economic recovery brought about by the temporary relief of the epidemic, the EU will increase its emission reductions in 2030 from the previous 40% to 55%. In addition, because the emission allowances of the fourth trading phase opened this year cannot be used to pay off the third phase Therefore, a large number of traders hope to purchase carbon emission allowances before December 31, 2020. This will cause market demand to rise sharply in the short term, which will drive carbon prices."
According to the official website of the Directorate-General for Climate Action of the European Commission, the fourth trading phase of the EU Emissions Trading System is 2021-2030. During this phase, the free carbon emission allowances will be cut at a rate of 2.2% per year, but will continue to be Industrial sectors that have difficulty in reducing emissions will provide certain free allowances to ensure their competitiveness in the international market; they will encourage technological innovation by allocating free emission allowances; at the same time, they will also consolidate the "market stability reserve" (the mechanism aims to Help reduce excess emissions allowances in the carbon market and improve the EU's emissions trading system's ability to withstand future shocks-Editor's Note); In addition, it will use several low-carbon financing mechanisms to help industries and power sectors respond to innovation and investment in low-carbon transitions challenge.
Amy Bowe told reporters that compared to the third trading stage, the free carbon emission allowances in the fourth trading stage of the EU Emissions Trading System have been cut faster. "At the same time, the EU will gradually abolish some free quotas after 2026, and the international carbon emission allowances under the framework of the Kyoto Protocol can no longer be used for compliance with EU emissions trading. These will also boost carbon prices to a certain extent. Further improvement."
However, Espen Andreassen, an analyst at energy service company Volue Insight, said that in view of the fact that the third trading stage of the EU Emissions Trading System from 2013 to 2020 mainly realized the transformation of power generation raw materials from coal to natural gas and renewable energy, the EU will still have There is only room for emissions reduction in various industrial sectors.
"From the current situation, the utilization of hydrogen energy is still immature. According to our estimates of the total greenhouse gas emissions of the 27 EU countries and the United Kingdom in 2019, the industrial sector needs to reduce about 1.3 billion tons of carbon dioxide equivalent in 10 years. Emissions can achieve the 2030 emission reduction target." Espen Andreassen said.
According to S&P Global Platts estimates, the EU emissions trading system only covers about 40% of the EU's total greenhouse gas emissions. Therefore, to achieve the 2030 emission reduction target, the entire EU needs more emission reductions. To make matters worse, according to Platts analysis, once the previously suspended emission allowances return to the market, the EU's carbon price will face downward pressure again.
Bright prospects for global emissions reduction According to the latest statistics of the industry organization "Global Carbon Project", in 2020, global carbon dioxide emissions have dropped by about 7%, the largest absolute reduction in emissions ever. At the same time, global enthusiasm in the field of carbon emission reduction is constantly increasing. Last year, many countries, including my country, clarified the goal of “carbon neutrality” and increased their original emission reduction efforts. Many traditional fossil energy companies also set net zero emission targets.
In this regard, Zou Ji said: “From a global perspective, emission reduction is entering a new stage. China and the European Union have active emission reduction targets and measures. The industry is also more optimistic about the next global emission reduction expectations. Take my country as an example. Last year, it reached a new level at the level of emission reduction policies. It put forward the goal of'carbon neutrality' and the new proportion of wind and solar power generation, etc., putting emission reduction in the priority development position. These are the global climate. The process provides a new impetus."
However, Zou Ji also pointed out that there is still much work to be done from the successive introduction of favorable policies to the final actual emission reduction. "Policies must ultimately be implemented into actions, including how to continuously mobilize the government and enterprises' enthusiasm for emission reduction, whether relevant scientific and technological research and development are in place, and the intensity of investment and financing." Article source "China Energy News"
