China’s carbon prices has surged as demand firms ahead of an upcoming deadline to report 2013 emissions data, indicating the markets may be less over-allocated than feared.
Spot permits in four of China’s regional pilot Emissions Trading Schemes (ETS) rose between five and 12 per cent, although market participants cautioned against reading too much into the numbers as liquidity remained low.
“More companies are now coming to the market knowing their positions after calculating their 2013 emissions. This has pushed up the prices,” a market participant told Reuters Newsagency.
Companies in the markets must report their 2013 carbon dioxide emissions to local regulators by the end of March or April, and then surrender the equivalent number of permits to governments by the end of May or June.
In the Shanghai market, permits rose 8.9 per cent over the week to $6.59.
Demand mostly came from oil and chemical companies, while major manufacturers and power generators remained on the sidelines, Reuters was told.
In Tianjin, prices shot up by 11.7 per cent to $5.99, Shenzhen saw a 6.1 per cent rise to $15.48, while in Beijing, spot permits were at $9.96, up five per cent for the week.
Reuters reports the Guangdong market was untraded, as it has been since December 20.
This week’s price increases follow stable rates in all regions since the beginning of the year.
Analysts had feared permit prices would drop due to over-allocation in China’s new carbon markets that rely heavily on companies’ own emissions data.
Reuters reports volumes traded remained low as many firms have yet to allocate funds to participate in the markets.
The Shanghai price rise came on the back of 38,000 permits being traded, while none of the other markets saw more than 6000 permits change hands on the official exchanges.
However, the Beijing Energy and Environment Exchange said that three deals totalling 42,000 permits at undisclosed prices had been negotiated off the exchange.
Reuters reports companies involved in larger bilateral deals are not required to publish prices.
One source said the Shanghai volume was helped by a conference this week where high-level officials urged companies to start trading.
The Shenzhen market was launched last June, with the other schemes following in November and December.
According to industry analysts, many of the covered companies are yet to come up with strategies on how to deal with climate regulations.
