BEIJING: China’s national carbon market, a major institutional innovation to facilitate emissions reductions, is accelerating as its first compliance deadline approaches, and analysts believe it will benefit from greater vitality with more industries included.

The average daily volume of carbon emissions trading saw a notable increase in November, according to data from the Shanghai Environment and Energy Exchange.

Last month, the domestic carbon market recorded a trade volume of 23.03 million tons, with a turnover of 939 million yuan ($ 147.32 million), accounting for almost half of the total since the start of online trading on July 16.

“Business activity in the domestic carbon market is expected to increase significantly as the December 31 compliance deadline approaches,” said Liu Jie, managing director of the exchange, adding that the market would experience robust activity on the fourth. trimester.

As the volume of carbon emissions trading increases, the price is in dynamic equilibrium.

The market’s closing price of carbon allowances recorded 42.94 yuan per tonne on Friday, lower than the opening price of 48 yuan per tonne on the first trading day.

The national carbon market has been functioning well since its inception and the price of the allowance still fluctuates within a reasonable range, ”said Sun Chuanwang, professor of energy and economics at Xiamen University.

Some industry insiders have noted that the domestic carbon market has a lot of potential, as the emissions trading system will cover more industries as part of the country’s efforts to achieve its goal of neutrality. carbon in 2060.

“So far, the more than 2,000 companies involved in the market are all in the power generation sector, which means that it has a large development space for other intensive industries. carbon, ”said Zhu Yaming, consultant at Ernst & Young China.

The country is promoting programs to include carbon emitters from other sectors such as the petrochemical and steel industries in the trade group, thereby improving market-based mechanisms to control greenhouse gas emissions.

Financial institutions will be allowed to join the trading system in the future, playing a critical role in making the national carbon market more active.

According to Wang Yifeng, chief financial analyst at the Everbright Securities Research Institute, financial institutions can help improve the liquidity of the carbon market and provide various services such as carbon emission allowance financing and carbon asset management. .

The scale of carbon financial products should be broadened based on clarified and fine-tuned market rules, Zhu said, noting that a safety net should be created to control financial risks.