Shanghai announces further CCER restrictions for its carbon market

Published 09:29 on April 24, 2015  /  Last updated at 10:19 on April 27, 2015  /  China, China's Offset Market  /  No Comments

Shanghai on Friday announced further restrictions to the use of offsets in its carbon market, ruling out CCERs generated after 1 Jan. 2013 if they were issued in the same batch as pre-2013 CCERs.

This corrects previous version, which wrongly stated that all projects starting before 1 Jan. 2013 had been ruled out of the Shanghai ETS.

Shanghai on Friday announced further restrictions to the use of offsets in its carbon market, ruling out CCERs generated after 1 Jan. 2013 if they were issued in the same batch as pre-2013 CCERs.

The rule change, which will be effective immediately, was announced on the Shanghai Development and Reform Commission website on Friday, although the note was dated Apr. 21.

Previously, Shanghai had said it would allow emitters to use CCERs from any project as long as the offsets were for emission cuts achieved after Jan. 1, 2013, but the new rule means even later CCERs will be ineligible if they were issued at the same time as pre-2013 CCERs from the same projects.

The reason is that the Chinese registry is unable to track the date the underlying emission cuts for each CCER took place.

The move will make it even tougher for Shanghai firms to find CCERs eligible in their market.

The scheme’s existing restrictions had already made almost all CCERs issued so far ineligible in Shanghai.

Friday’s announcement underlines the difference in approaches between Shanghai and other markets such as Tianjin, which has no qualitative restrictions. A trading firm on Thursday bought 200,000 pre-CDM CCERs on the Tianjin exchange that it has already sold on to local emitters.

But some observers question Shanghai’s need for offsets as the market is seen to be over-supplied, even though some companies – especially in the power sector – are short.

Shanghai Emission Allowances (SHEAs) earlier this week hit a new record low of 25 yuan ($4.03), but have since bounced back to 27 yuan.

By Stian Reklev – stian@carbon-pulse.com