China's national carbon market moved downward to the range of 100-101 yuan/t last week (December 9-13) due to weak purchases and carry-over sales, with the intra-week high at 101.72 yuan/t on December 9.

During the week, the highest carbon price reached 102.03 yuan/t, while the lowest was 98.95 yuan/t. The market closed at 100.74 yuan/t on December 13, down 0.2% compared to the same day a week ago.

In the same period, the total trade volume of carbon emission allowances (CEA) in China's national market was 40.20 million tonnes, surging 147.38% week on week, with the total value reaching 3.98 billion yuan, jumping 151.85% on the week.

Specifically, trades of bulk agreement contracts were 35.75 million tonnes, valued at 3.53 billion yuan, occupying the majority share of the trades, while that of listed agreement contracts reached 4.46 million tonnes, valuing 443.89 million yuan.

The lowest trading volume and value was registered on December 13, at 5.08 million tonnes and 496.43 million yuan respectively. The highest trading volume and value was recorded on December 10, at 9.73 million tonnes and 968.81 million yuan, respectively. On December 13, the trading value soared 92.29% from 258.17 million yuan a week ago.

In the year to December 13, China's CEA trades reached 169.74 million tonnes, with the value totaling 16.29 billion yuan. Total CEA trades since the market went online reached 611.36 million tonnes, which valued 41.21 billion yuan.

Policies in Focus

China's Ministry of Industry and Information released a report on December 6, announcing the establishment of a committee to strengthen research, development, revision and promotion of green and low-carbon development in the industrial sector, with the aim of meeting the carbon peaking and carbon neutrality targets.

A Memorandum of Understanding (MoU) was signed between Hong Kong Exchanges and Clearing Limited (HKEX) and Shenzhen Carbon Emissions Exchange on December 7. The two exchanges will jointly explore opportunities for carbon market connectivity and climate financing in the two regions.

By doing so, the exchanges could establish a voluntary carbon market in the Guangdong–Hong Kong–Macao Greater Bay Area, supporting China in meeting its carbon peak target by 2030 and carbon neutrality target by 2060.

The Hong Kong Financial Services Development Council issued a report on December 11, indicating that Hong Kong has not yet fully developed into the preferred location for a carbon exchange. However, it could become a leading carbon exchange center in the region through supporting the internationalization of the carbon market in mainland China.

This week, China's national market CEA prices fluctuated due to sales pressure from carry-overs and lagged purchase demand, while the surge in trading volumes was attributed to compliance obligations and market expectations. Given the current purchase demand, carbon prices are expected to rise modestly next week.