According to the Shanghai Environment and Energy exchange, the national carbon emission trade market will open on July 16th (Friday).
At present, only the power generation industry is included in the national carbon emission trade, which covers over 2,000 major energy-generating companies and an estimated emission of around 4 billion tons of CO2 equivalent. But China plans to include other 7 major energy-intensive industries including pulp & paper in the coming years.
According to the Interim Regulations of National Carbon Emission Trading, at the present stage, the product for the national carbon trade include CEA, or China emission allowance, which is a cap-and-trade allowance system, and CCER, or China certified emission reduction, which is a project-based carbon crediting system. The CEA and CCER systems will bring both challenges and opportunities for pulp and paper industry players.
After the pulp and paper industry is incorporated into the national carbon emission trade scheme, energy-intensive players in the industry will need to purchase CEA or CCER via the exchange if they want to breach emission caps, or conduct CCER projects to improve internal energy efficiency, which also requires capital investments. Currently, around 60% of China’s energy is generated through coal-fired thermal power stations, and a large portion of pulp and paper producers relies on electricity and heat purchased externally. Therefore, with the progress of the carbon trade market, demand for carbon reduction-related upgrades will emerge, which will bring opportunities for equipment providers. Also, the market concentration ratio may increase further as less energy-efficient players are phased out of the market.
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