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China Plans New Participants, Derivatives in Carbon Trading Market

The national emissions trading scheme, which covers some 2,225 power companies, will be opened to financial institutions as well as emitters in non-ferrous metal and building materials

Workers extract copper at a factory in Shangrao in Jiangxi province. Producers of non-ferrous metal may be included in the market as early as next year. Photo: Reuters.


China plans to add new participants to its national emissions trading scheme (ETS) and roll out derivative products as part of efforts to grow liquidity, the head of the exchange that hosts trading told the Shanghai Securities News.

The national ETS, which covers some 2,225 power companies, will be opened to financial institutions, as well as emitters in sectors such as non-ferrous metal and building materials, said Lai Xiaoming, chairman of the Shanghai Environment and Energy Exchange.

The exchange also aims to launch carbon-related derivative products, including swaps, forwards and options to help build China into a global centre for carbon trading and pricing, Lai was quoted as saying.

China’s spot trading in carbon dioxide quotas has surged since November as power companies rush to honour their obligations in emission management towards the end of the year.

But that volume is likely to slump in January, as market players are from the same sector, the newspaper said, citing Lai.

The exchange has been studying ways to diversify participants and boost liquidity in the carbon trading market, the report said.

Producers of non-ferrous metal and building materials may be included in the market as early as next year, while the exchange is considering adding other sectors, it said.

China is seeking to use market mechanisms to help bring emissions to a peak before 2030 and to net zero by 2060.


  • Reuters with additional editing by Kevin Hamlin





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Kevin Hamlin

Kevin Hamlin is a financial journalist with more than 40 years of experience covering Asia. Before joining Asia Financial, Kevin worked for Bloomberg News, spending 12 years as Senior China Economy Reporter in Beijing. Prior to that, he was Asia Bureau Chief of Institutional Investor for ten years.


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