Guangdong sold 314,000 allowances at 40 yuan each in Wednesday’s auction, the Guangdong carbon exchange announced, a meagre 10% of the 3 million permits that were on offer.

The auction was the last of four planned permit sales for the 2014 compliance year, but it attracted little buying interest as the government had set a minimum price of 40 yuan for the units, well above the 17.71 yuan closing price in Guangdong’s secondary allowance market on Wednesday.

Two companies classified as ‘new entrants’ bought permits, one of them bidding 45 yuan, according to the exchange.

Guangdong, the biggest of China’s pilot markets, is the only one that sells allowances through auctions on a regular basis.

Meanwhile, Shell and Chinese state-owned power company Huaneng announced Wednesday that they had entered into a swap agreement on the Guangdong market.

According to market sources, Huaneng will provide Shell with allowances, while Shell will provide Huaneng with CCERs eligible in the Guangdong market up to its 10% usage limit.

By Stian Reklev – stian@carbon-pulse.com