China’s emissions cap market is huge but inefficient, experts warn

China, chinese flag

The market for emission allowances in China has had almost a week of operation. But even after such a short period of time, some experts think that it will not soon meet the goals for which such markets exist. Allowances are simply too cheap.

When greenhouse gas emission allowances were traded on the Shanghai Stock Exchange in mid-July, one ton could be bought for $7.4. The current price is about half a dollar higher. The same ton of greenhouse gas emissions on the European Union market trades at almost $62, almost eight times the Chinese price.

And this, according to experts, is the main reason why the Chinese market for emission allowances cannot yet lead to the same effects as in the European Union. Although the allowances apply to more than 2,000 Chinese power plants, at such a low carbon price, it is not worth investing in upgrading their technologies with regard to greenhouse gas emissions.

“The Chinese market is not generating enough impulses to reduce electricity production in coal-fired power plants,” Lauri Myllyvirta, an analyst at the Centre for Research on Energy and Clean Air, said on Twitter. According to him, the Chinese allowance market thus functions more as an administrative tool than a real market.


Please enter your comment!
Please enter your name here