The Chinese subsidiary of UK trading firm Carbon Trading Capital on Monday bought 506,000 pre-CDM CCERs from Hailuo Cement Group on the Tianjin Climate Exchange in the biggest offset deal so far in China’s emerging carbon market.
The deal went through at an undisclosed price.
Carbon Trading Capital plans to sell the offsets on to local emitters, who see the units as a cheaper compliance option than regular permits, which closed in Tianjin Monday at 24.33 yuan.
Pre-CDM CCERs are banned in most of China’s pilot markets, and Tianjin is emerging as a key destination for the offset type. Last week, trading firm Timing Carbon bought 200,000 pre-CDM CCERs, most of which had already been contracted to Tianjin emitters.
Carbon Trading Capital on Monday was also involved in the first-ever CCER deal in the Shenzhen market, buying 22,000 pre-CDM offsets from state-owned power company China Guodian Longyuan.
The CCERs were generated from a wind farm project in Gansu province.
“This is the first patch. We have other deals following in Shenzhen soon,” Kou Weiwei, director of carbon financing and structuring at Carbon Trading Capital, said.
Shenzhen is one of only two pilot markets in China that have yet to announce rules on CCER restrictions.
Monday’s trade seemed to support market expectations that Shenzhen will allow use of pre-CDM CCERs for compliance, but only from certain provinces, predominantly in the northwestern part of China.
Pre-CDM offsets are controversial because they represent emission cuts that took place a decade ago, at projects that later became part of the CDM.
Beijing, Chongqing, Guangdong and Shanghai have banned them, while Hubei only accepts offsets from within its own borders, leaving Shenzhen and Tianjin the only markets for pre-CDM CCERs, which account for almost all the CCERs that have been issued so far.
By Stian Reklev – firstname.lastname@example.org