China Petroleum & Chemical (Sinopec) closed the first bulk transaction on China’s national carbon market on July 21, buying 100,000 metric tons (t) of carbon credits to offset emissions from its own power plants.
China formally launched the carbon market on July 16 in trading centers in Beijing, Shanghai, and Wuhan. The power-generation sector is China’s first—and so far its only—industry trading its emissions. Carbon trading lets companies buy and sell credits, assigned to them by governments, that permit them to emit carbon dioxide.
A total of 2,225 major power plants throughout China are part of the market. Their CO2 emissions last year were an estimated 4 billion t, about 40% of the nation’s total. Other sectors, including steelmaking, construction, and chemicals, will be added to the market under China’s current 5-year plan, which runs until 2025.
Chen Mei’an, an analyst with Innovative Green Development Program, a Beijing-based low-carbon consultancy, says she expects the chemical industry to embrace trading to help it meet the carbon reduction goals the government has set for it.
“The sector’s emission reduction is crucial to help China reach its goals of emission peak by 2030 and carbon neutrality by 2060,” Chen says. “Deeper and broader involvement in the carbon trading market will help the chemical industry improve its energy efficiency, develop new low-carbon technologies, and explore more emission reduction options.”
By the end of trading on July 29, carbon was 53 yuan ($8.20) per metric ton. The price is much lower than the recent price of about $65 per metric ton in the European Union’s Emissions Trading System.