The Shanghai carbon market has achieved remarkable results in the past 10 years
In recent years, the construction of China's carbon emission trading market has been steadily promoted. Since October 2011, China has launched pilot projects for local carbon emission trading markets in Beijing, Tianjin, Shanghai, Chongqing, Guangdong, Hubei, Shenzhen and other places. As of December 29, 2023, the Shanghai carbon emission trading market has attracted more than 1,860 units to open accounts for trading, with a cumulative trading volume of 240 million tons and a cumulative turnover of 4.222 billion yuan, ranking first in the country in terms of the volume of national voluntary certified emission reductions (CCER). The managed enterprises have completed the settlement of carbon emission allowances in 2022, creating a record of 100% compliance for 10 consecutive years. At present, 378 key emitting enterprises have been included in the Shanghai carbon market, covering 28 industries such as steel, electric power, chemicals, aviation, water transportation and construction.
On November 26, 2013, the Shanghai Carbon Emission Trading opened on the Shanghai Environment and Energy Exchange, marking the official opening of the era of the Shanghai Carbon Emission Trading Pilot from the R&D stage to the operation stage, and the use of "economic leverage" to control carbon emissions. Over the past decade, the cumulative trading volume and value of the Shanghai carbon market have shown an increasing trend.
The Shanghai ETS has gone through 10 years of great significance. Zhou Jun, director of the Climate Change Division of the Shanghai Municipal Bureau of Ecology and Environment, also felt the same way. He admits that 100% compliance in the carbon market is not achieved overnight, and in the early days of the establishment of the carbon market, the carbon emissions, compliance costs, and cooperation of enterprises are unknown. As a result, the Shanghai ETS has adopted a three-step approach, and practice has shown that the results are obvious.
The first phase, from 2013 to 2015, focused on popularizing the concept of carbon markets. In order to increase the acceptance of enterprises, the Shanghai carbon market adopts the method of 100% free distribution of allowances. In the second phase, from 2016 to 2018, Shanghai gradually tightened the proportion of free allowances, and the overall quota surplus in the market decreased year by year, prompting enterprises to continuously improve their carbon emission management level and awareness of carbon asset management under pressure. In the third stage, from 2019 to the present, the "buffer period" has ended, and a large number of enterprises have faced the pressure to comply with the agreement.
According to reports, the enterprises currently included in the management of carbon emission quotas in Shanghai account for more than 60% of the city's carbon emissions. In terms of emission reduction effects, in the past 10 years, Shanghai's carbon dioxide emissions per unit of GDP have dropped by more than 50%. At the same time, green electricity trading has been stimulated. Encouraged by policies, Shanghai's green electricity trading volume will exceed 2 billion kWh in 2023, and export-related enterprises such as steel, petrochemical, and electronic information are the most enthusiastic to participate in green electricity trading.
Through green electricity trading, users can not only obtain a clean and reliable power supply, but also enjoy the environmental rights and green attributes brought by green electricity, and enhance international competitiveness. According to reports, from 2022, Covestro, one of the world's largest polymer producers, will participate in green electricity trading in China. In 2023, more than 40% of the electricity generated at Covestro's Verbund site in Shanghai will come from green electricity, and the proportion of "self-production and self-consumption" is steadily increasing. At the beginning of the new year, the second phase of the photovoltaic project at Covestro's Shanghai Verbund site will be put into operation, which can generate 6.5 million kWh of green electricity per year and reduce thousands of tons of carbon emissions. In 2023, DSM-Firmenich will use 40% of all DSM-Firmenich plants in China. The company's six operating sites, including Shanghai, Jiangsu, Wuxi and Changchun, have also signed five-year green power trading agreements to gradually achieve 100% green power supply from 2024 to 2028.
