Beijing Starts China’s Third Carbon Exchange With First Trades

Beijing opened the third of seven carbon exchanges planned in China, with first trades in the capital fetching higher prices than debuts in Shenzhen and Shanghai.

Five trades covering a total of 40,800 metric tons carbon emission quotas were completed at prices ranging from 50 yuan ($8.21) to 51.25 yuan a ton on the first day at the Beijing Environment Exchange, it said today in a statement.

Beijing has agreed to study the possibility of “inter-regional emissions trading” with the city of Tianjin and the provinces of Hebei, Shanxi, Inner Mongolia and Shandong, the exchange statement said.

Beijing’s opening prices compared with 28 yuan a ton in Shenzhen and 25 yuan to 27 yuan in Shanghai, Bloomberg New Energy Finance said yesterday in a note. The London-based research company forecasts that “the Beijing allowance price will be heavily regulated and controlled, and is therefore unlikely to reflect the cost of abatement under the scheme,” even as the city may generate demand for emission reductions.

China selected seven cities and provinces to set regional caps and pilot programs for trading emission rights as part of its initiative to cut the intensity of emissions by as much as 45 percent before 2020 from 2005 levels.

The Chinese government has said the pilot exchanges are a precursor to a national trading system as soon as 2016. China joined India at this month’s climate talks in Warsaw in resisting longer-term commitments until the U.S. and Europe agree to a heavier burden.

490 Companies

Beijing’s carbon platform includes 490 companies and covers 40 percent of the capital’s total emissions, the official Xinhua News Agency reported, citing the Beijing Municipal Commission of Development and Reform. Under the platform, companies that produce more than their limit of emissions can buy allowances from those that emit less.

Sinopec Beijing Yanshan Co., a unit of China Petroleum & Chemical Corp. (386), bought 20,000 tons of carbon quotas from Beijing Energy Investment Holding Co., Sinopec Beijing’s parent said in an e-mailed statement yesterday.

Beijing is the second smallest of the pilot programs after Shenzhen in terms of emissions covered, BNEF said. Institutional investors are allowed to join in the Beijing trading system, while individual private investors are prohibited, it said.

Citic Securities (600030) Co. and Datang International Power Generation Co. (991) also participated in yesterday’s trading, the exchange said.

Shanghai sold its first carbon permits on Nov. 26 following the debut of south China’s Shenzhen city in June. Pilot programs in Chongqing, Tianjin, Hubei and Guangdong have yet to start their exchanges.

Trading of permits in Guangdong is scheduled to begin by the end of this year. The province will allocate quotas for 388 million tons of carbon emissions to 242 companies by mid-December, according to a Nov. 26 statement on website of its provincial Development and Reform Commission.

To contact Bloomberg News staff for this story: Feifei Shen in Beijing at fshen11@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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