CN Markets: Beijing CO2 price down 25% in 2015, volume up 17%

Published 09:48 on February 4, 2016  /  Last updated at 09:49 on February 4, 2016  /  China, China's Offset Market, China's Pilot Markets  /  No Comments

The average price of Beijing Emissions Allowances (BEAs) traded in the 2015 calendar year fell 25% year-on-year to 41 yuan ($6.23), but liquidity rose by 17%, the Beijing Environment and Energy Exchange said Thursday.

The average price of Beijing Emissions Allowances (BEAs) traded in the 2015 calendar year fell 25% year-on-year to 41 yuan ($6.23), but liquidity rose by 17%, the Beijing Environment and Energy Exchange said Thursday.

The exchange handled transactions totaling just over 3 million BEAs in 2015, worth 131 million yuan ($19.9m), the exchange said in its annual market review.

Most of the volume – 1.9 million BEAs – was bulk trades negotiated over-the-counter and cleared on the exchange. Beijing allows companies to do OTC deals for clips of over 10,000 allowances, which is attractive for some big emitters as OTC deals are not bound by the 20% limit in daily price movements.

The average size of OTC deals was 54,000 permits, 28 times the size of the average on-screen deal, the report said.

PRICE DROP

Like the other pilot markets Beijing does not publish verified emissions data for ETS participants or detailed allocation numbers, so there is no accurate information on how long or short the market is, although observers say the scheme is marginally over-allocated.

The overall slowdown in the Chinese economy is likely to have kept a lid on Beijing CO2 emissions last year, contributing to the price dropping to 41 yuan, from 54 in 2014.

Offset supply might have been an additional reason for the price drop. Beijing emitters can use CCERs to cover 5% of their annual emissions, and the first CCERs were only issued in Jan. 2015, meaning they were no factor in 2014.

But the data showed that while 5 million CCERs traded in Beijing last year at an average price of 21.53 yuan each, only 64,106 of them were used for compliance, while the remaining 95% were sold off to other markets.

FACTFILE

  • By Dec. 31, 2015, the exchange had opened 553 trading accounts: 481 compliance firms, 31 institutional investors, 38 individuals, and 3 forestry credit traders.
  • In 2016, another 600 companies, most of them small, will be added to the market.
  • Compliance companies accounted for 71% of traded volume in 2015.
  • Emitters from the service sector were involved in the highest number of trades. Heating companies and petrochemicals were involved in fewer, but larger deals.

By Stian Reklev – stian@carbon-pulse.com

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