Hubei will allow emitters to use a limited amount of non-delivered CCERs from forward contracts for 2014 compliance in a move to ensure firms can use offsets to meet targets despite limited supply, the provincial market regulator said Thursday.
The province on Thursday became the fifth of China’s seven pilot markets to publish rules for offset use.
In the Hubei market, each company can use CCERs to cover for up to 10% of their emissions.
But in a first for China, the Hubei Development and Reform Commission (DRC) said that projects that generated emissions reductions between 2013 and May 2015 can sell up to 60% of their CCERs to Hubei companies on a forward basis, and those would be eligible for compliance this year even if they have not been delivered yet.
The move is designed to ensure that local firms will be able to take advantage of the cheaper CCERs for their 2014 compliance, due on May 31, even though supply has been slower than expected, leaving companies in some markets concerned there will not be any CCERs available.
The NDRC has so far issued 13.7 million CCERs, almost all of them from pre-CDM projects, which dominate the market.
The Hubei rules did not specifically ban pre-CDM CCERs, which trade at around 5-8 yuan ($0.80-1.30), whereas allowances in Hubei’s secondary market closed Thursday at 24.81 yuan.
But the government did rule out the use of offsets from hydro project and will also only allow CCERs from within the province, with the exception of up to 50,000 CCERs from provinces that have a cooperation agreement with Hubei, although there was no information on which provinces that might be.
Tianjin and Shenzhen are now the only markets yet to publish CCER rules, although Shenzhen is expected to do so within the next few weeks.
The story has been corrected to show that some projects can sell up to 60% of their offsets to emitters on a forward basis. There is not a 60% limitation on use of forward CCERs for companies, as the first version of the story implied.
By Stian Reklev – firstname.lastname@example.org