Caixin
Jan 18, 2023 06:12 PM
RESEARCH & ANALYSIS

China Carbon Watch: Block Deals Dominated December Trading

Trading in China’s national carbon emissions allowance (CEA) market rose to more than 26 million tons in December, the highest monthly total in 2022.

Block trades accounted for an overwhelming 95.8% of the volume, suggesting that many may have been between subsidiaries of the same parent company for their internal year-end CEA balancing, as block trades have been thought to be the main method for intra-company transactions. The allowance submission deadline for the current compliance cycle is still about one year away.

The last two months of 2022 saw a burst of trading activity after the release of the draft CEA allocation plan by the Ministry of Ecology and Environment in early November. Trading in the two months combined accounted for more than 66% of the 2022 annual volume.

 

Market prices diverged. Open market transactions closed December at a 2022 low of 55 yuan ($7.90) per ton. The volume-weighted monthly average price for open market transactions was 56.39 yuan per ton, also a low for the year.

Block trades, on the other hand, finished the year with a December volume-weighted average price of 55.55 yuan per ton, 1% higher than the 2022 yearly average of 54.98 yuan per ton.

The volume-weighted average price for all trades in December was 55.59 yuan per ton, while for the entire year it was 55.3 yuan per ton.

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 Jonathan Breen (jonathanbreen@caixin.com)

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