Executive Summary
The 2022 China Carbon Pricing Survey, conducted during October and November 2022, aimed to gather insights on future carbon pricing policies in China from stakeholders across carbon-intensive industries. With a focus on understanding perceptions about China's national carbon market and the impact of carbon pricing on investment decisions, the survey included responses from 465 participants across various sectors.
Key Findings:
China's Carbon Market Progress
- Eight Regional Markets: Launched between 2013 and 2016, experimenting with diverse aspects such as allocation mechanisms, sector coverage, and use of offsets.
- National Carbon Market: Announced post-Paris Agreement in 2015, with formal regulation by the Ministry of Ecology and Environment (MEE) in February 2021. The national market initially focused on the power sector, expanding to include other key emitting sectors over time.
- Initial Launch: July 2021 saw trades commence on the Shanghai-based national carbon emissions exchange platform at a rate of 48 CNY per tonne.
- First Compliance Cycle: Ended on December 31, 2021, covering approximately 2,162 power sector enterprises with GHG emissions totaling around 4.5 billion tonnes annually.
Respondent Insights
- Power Sector: The majority of respondents (38%) were from power generation companies. A notable increase was observed in expectations for needing to purchase allowances in the market, rising from 26% to 41% compared to the previous year.
- Sector Readiness: The cement and iron and steel sectors are seen as more prepared to join the national carbon market by 2023, with the weighted average expectation suggesting both sectors will be part of the market by 2024.
- Investment Impacts: Respondents anticipated a significant increase in the influence of carbon pricing on investment decisions.
Additional Developments
- Allowance Allocation Plan: A new draft plan for allowance allocation for 2021 and 2022 emissions was released by the MEE in November 2022, indicating continuation of a two-year compliance cycle for power sector enterprises until December 2023.
- Monitoring, Reporting, and Verification Guidelines: Updated guidelines were issued by the MEE for the power sector's emissions, aiming to enhance the quality of carbon emission data.
- CCER Regulation: While a notification was issued in November 2021 permitting the use of previously issued Certified Emission Reductions (CCERs) to offset allowances, the fully amended CCER regulation is anticipated to be released in 2023.
Conclusion
The survey provides valuable insights into the evolving landscape of China's carbon pricing policies, highlighting the increasing expectations for carbon pricing impacts on investment decisions and the growing readiness of industries to engage with the national carbon market.
