Hubei plans to issue 281 million allowances under its emissions trading scheme for 2015, according to a draft plan seen by Reuters, 13% lower than in 2014.

The plan, still subject to final approval by the provincial Development and Reform Commission, proposed to set aside 8% of the allowances in a price stability reserve, leaving some 258.5 million permits to be handed out to scheme participants.

The market’s 138 participants emitted 236 million tonnes of CO2 in 2014, although the provincial government said in March that 48 more companies would join the scheme this year.

Electricity generators in Hubei only get half their allocated amount initially, and their final number of permits is adjusted after they submit verified emissions data to the government. The adjusted emissions numbers for 2014 were not published.

The draft plan and news of the allocation cut was circulated a week after the Hubei price fell to an all-time low of 20.03 yuan.  It has since rebounded and closed Tuesday at 23.05 yuan, but liquidity remains poor in what has up to now been China’s most traded pilot carbon market since it launched in 2014.

One source told Carbon Pulse the plan also proposed to allocate 10% of 2016 allowances along with the 2015 permits, adding that these permits would not be eligible to use for 2015 compliance.

By Stian Reklev – stian@carbon-pulse.com

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