China issued around 3 million carbon offsets on Wednesday, the last issuance likely to go through before compliance in the seven pilot markets, taking the total number of issued CCERs to around 20 million.

The NDRC issued the offsets to 26 different projects, it said on its website.

But according to Carbon Pulse calculations only 945,000 of the 3 million went to so-called Category 1 (new) projects, whose CCERs would be eligible in markets like Beijing, Chongqing, Guangdong and Shanghai, which have ruled out use of pre-2013 CCERs.

The vast majority of the CCERs issued so far would only be eligible in Tianjin, as Hubei has geographical restrictions on eligibility, and Shenzhen – which hasn’t announced eligibility rules yet – has signalled it intends to do the same.

Twenty million is far less than the roughly 120 million CCERs emitters in the seven pilot markets are allowed to use each year, although it is questionable how much the shortage in supply means as most of the markets have been over-allocated.

HUBEI TURNAROUND?

Six of the markets only allow use of issued CCERs for compliance, while Hubei raised some eyebrows last month, when it announced that local emitters would be allowed to use offsets not yet issued for compliance.

But market sources told Carbon Pulse the Hubei carbon exchange is restricting access to forward deals, indicating that while using forward delivery contracts for compliance is possible in theory, it may prove impossible in practice.

“We are in talks to sell some of our 30,000 credits tradable in Hubei at 20 yuan each, but the local authorities tend to restrict speculative forward trading. We were told only spot offsets can be listed on the exchange,” one broker said.

However, another broker told Carbon Pulse it had been allowed to get its forward-based CCERs registered on the exchange, leaving it unclear how exactly the local authorities handle the issue.

By Stian Reklev – stian@carbon-pulse.com