China Carbon Watch: Trading Volume Hits Record Low for Second Month in a Row

Trading in China’s national carbon emissions allowance (CEA) market ended September with a monthly total volume of 10,810 tons, falling to a record low for the second consecutive month.

Block trades were absent for the entire month, a first since the launch of the market in July 2021.

Market prices, on the other hand, continued to hold up well, with open market transactions closing September at 57.50 yuan ($8.08) per ton, roughly down 0.9% from August. The September volume-weighted average price increased 4.6% from August to 58.70 yuan per ton.

The market has seen trading slow to a trickle after a surge of activity around the allowance submission deadline on the last day of 2021 for the trading scheme’s first compliance cycle.

Regulatory and economic uncertainties held back market participants — power generators covered by the allowance trading scheme — from engaging in the market.

A Sept. 28 update from the Ministry of Ecology and Environment on the status of the much-anticipated Interim Regulation for the Management of Carbon Emissions Trading (碳排放权交易管理暂行条例) did not give a clear signal on the timing of the regulation’s issuance, which has kept the market in a wait-and-see mode.

Bai Bo is executive chairman and co-founder of the Singapore-based MetaVerse Green Exchange.

The analysis and opinions expressed in third-party articles are those of the authors and do not necessarily reflect the positions of Caixin.

Contact editor Joshua Dummer (joshuadummer@caixin.com)