Guangdong Carbon Market-- A New Area for Green Investment.pdf
广州碳排放权交易所碳交易服务体系 介绍 October 23, 2015 Guangdong Carbon Market A New Area for Green Investment 1Table of Contents 2 1 Introduction to the China Emissions Exchange CEEX 2 Market Review of the CCEX 3 Guangdong Experiences in Carbon Trading 4 Suggestions for National-ETS3Partnership between the Province and the City It was officially launched on September 11, 2012. The Guangzhou Exchange Service Group Co. Ltd held all the shares. Registered Capital 100 million CNY 1.1 Trading Plat 4 Comprehensive Trading Plat National CCER voluntary emissions trading Guangdong Province carbon emissions trading Innovation in carbon finance GSP implementation Pilot project for energy savingsGoals Build a first-class carbon emissions exchanges within three years Build a professional plat for national environmental equity capital markets and services within five to eight years Measures For the existing trading products, measures will be taken to enhance its trading volume; CEEX will also serve the economy, promote the development of the complementary mechanisms such as forest carbon sink, energy efficiency projects, conservation in construction projects and transportation emission reduction; CEEX also needs innovation in carbon finance. It will develop green investment and financing plat and new products such as the carbon futures and options. 1.2 Strategic Goals 567 We are an important member of the Carbon Trading Management and Transaction Working group and we actively participated in carbon emissions trading mechanism design (1 ) “Rules and Regulations for CEEX Trading” (2 ) “Interim Measures on Members Management of CEEX” Institutional Design Establish a secure, convenient and efficient electronic trading system of allowance and CCER Connection to multiple systems 1 The provincial allowance registration system 2 The bank clearing system 3 The provincial non-tax finance system 4 The national voluntary emissions trading registration system. System Development The risk control system 1 Price Limit 2 Monitor abnormal transactions 3 ination disclosure We also standardized the new account processing. Rules and Regulations 2.1 Plat Building and Trading Mechanism Development2.2 China s First Allowance Auction On December 16, 2013,we hosted china s first auction of carbon emissions allowances and got oversubscribed 1.69 times. As of October 22, we hosted ten allowance bidding and the amount reached 14.86 million tons while the turnover reached 773 million CNY . Allowance Auction in Primary Market in Guangdong Province 181 compliance company 6 new project 4 investment institutions 8 auction date allowance offered for auctiontons transaction amount (tons deal price/floor price total bidders total bidders 2013.12.16 3000000 3000000 60/60 56 28 2014.1.6 5000000 3892761 60/60 46 46 2014.2.28 2000000 1130557 60/60 24 24 20144.3,4.17,5. 5 2014.6.25 3600000 1865000 1737151 1362870 60/60 60/60 80 46 80 46 2014.09.26 2014.12.22 2015.03.27 2015.06.10 2015.09.21 2000000 1000000 1000000 3000000 300000 2000000 701442 422461 314643 300000 26/25 30/30 35/35 40/40 16.1/ 33 12 7 2 19 19 12 7 2 4 ParticipantsThe accumulated transactions in the secondary market reached 8.25 million tons and the turnover reached 186 million CNY. 76 20 40 compliance company investment institutions individual investors 9 2.3 Secondary Market Continues to Be Active Primary market 70 Secondary market28 Primary market 58 Secondary market29 Participation in secondary market transactions (As of Oct. 22 nd ,2015 Primary market 51 Secondary market13 Primary market 10 Secondary market6 power iron and steel petro-chemistry cement2.3 Secondary Market Continues to Be Active Guangdong Vintage 2015 Jun. 24 th - Oct. 22 nd A number of reasons behind the stronger market perance Mechanisms of Guangdong-ETS improved Allowances supply tightening, switch from an allowance allocation system Provision of trading services especially carbon financial innovation Carbon assets management capabilities of entities and institutions enhanced 1.08 2.22 0.00 2.94 0 1 2 3 4 5 6 2014.6.24-10.22 2015.6.24-10.22 Online-trading OTC 378.9 Million tons Vintage 2015 Vintage 2014 10Transaction shares of pilot markets as in 10,000 tons 11 As of Oct. 22 nd ,2015, 23,115,409 tons were traded on the Guangdong provincial allowance auction trading market, accounting for 37.1 of all ETS pilot projects. The turnover was 958 million C N Y, accounting for 44.1 of the national total. Guangdong, 2,311.54 , 37. 1 Shenzhen, 44 5.78 , 7.2 Beijing 530.55 , 8.5 Tianjin, 204.4 0 , 3.3 Shanghai, 41 8.24 , 6.7 Hubei, 2,296. 17 , 36.8 Chongqing, 2 7.44 , 0.4 Guangdong, 95841.29 , 4 4.1 Shenzhen, 2 1620.73 , 10 .0 Beijing, 237 64.74 , 10.9 Tianjin, 360 8.08 , 1.7 Shanghai, 1 2758.98 , 5. 9 Hubei, 5887 7.66 , 27.1 Chongqing, 676.66 , 0.3 2.4 National Carbon Market Transactions Turnover shares of pilot markets as in 10,000 yuan (As of Oct. 22 nd ,20152.5 CCER Trading in Guangdong March 9, 2015 Jan, 2013 As of Oct. 22, 2015 The CCER projects willing to join the carbon trading in Guangdong amounted to over 10 million tons of carbon emissions. We push forward the existing projects and the CCER transactions totaled 1,011,000 tons. The first CCER online trading volume 200,000 tons 12 We were also approved by the National Development and Re Commission to become one of the five voluntary greenhouse gas emissions trading mechanisms.2.6 Membership Structure The highest level of membership Full participation in carbon emissions trading, brokerage or proxy services. comprehensive member Including compliance companies, institutional members and individual members self-management member Carbon emissions trading brokerage or agency services brokerage member Providing project development and carbon asset management,energy saving technology transfer, investment and financing services, consulting, assessment, audit, legal, bidding, auction and other services service member Research, standards development, hosting forums and training. strategic cooperation member participate directly in transaction not participate directly in transaction 1314Guangdong focuses on the coordinated development of the primary market and the secondary market. It is the only pilot project in China to issue free and auctioned allowances. It is also the country s largest and only allowance auction plat. In addition to the primary and secondary markets, we introduced long-term carbon trading rules and deferred transaction of spot. We follow the requirements of the state and the Free Trade Zone to study the feasibility of the carbon futures and try to enrich the market. 15Fixed-price ,simplest mode of auction Close auction ,ensure the maximum trading volumes with fairness in consideration Listing bid ,the best efficiency mode of trading Listing for click ,widely adopted mode with semi-automated match One-way bidding ,seller’s market , disposal of default assets Negotiating transfer ,block trade ,more flexible price 16Guangdong continues to modify the regulation system and carry out allowance distribution, MRV as well as risk prevention and control with high standards. Optimization The listed trading, delivery and settlement will be adjusted Adjustment The allowance distribution will be optimized and the allowance auction will be improved. Modification The new carbon emission trading rules will be published to improve the transaction means 17Quantities of foreign-capital members 3 Trading perance of foreign members As of Oct. 22 nd ,2015, 3,414,547 tons allowance and 251,000 CCER were traded by foreign members in secondary market, accounting for 41.4 and 24.8 of Guangdong-ETS. Improved the compatibility of CEEX during the process of serving foreign member Enhance International and domestic cooperation European Commission Directorate General for Climate Action IFC, IETA, Japan External Trade Organization JETRO National Climate Change Strategy Research and International Cooperation Center Sun Yat-sen University, Jinan University, Beijing University of Aeronautics and Astronautics Meizhou, Zhanjiang, Zhaoqing, Qingyuan, Shaoguan and other regions Shanghai, Tianjin, Hubei and other pilot exchanges Hong Kong Emissions Exchange Guangzhou CEPREI 5 7 Hunan, Hainan and other provinces 8 6 9 4 3 2 1 182018/8/28 Number of Transactions Volume Transaction amount Investment institutions 46.80% 81.40% 39% Individual investors 55.50% 3.10% 3.30%Preferential Policies Handling fee Investment Agencies Individuals Annual fee deducted for over 3,000 tons of trade 50 annual fee reduction and one free training opportunity for over 100,000 tons of trade 100 annual fee reduction and two free training opportunities for over 200,000 tons of trade The handling fee was reduced from 5 ‰ to 2 ‰ 20Better CCER Transaction Modes CCER initial transfer from the account of the transferee to that of the recipient The handling fee was waived so the transaction cost was lower. CCER is delivered online through trading plat fund is transferred by OTC settlement Neither parties need to re-open bank accounts. 21CEEX issued the first carbon trading corporate account overdraft and carbon allowance mortgage financing. Meanwhile it worked on other products as well as allowance management and re-purchase of allowance. It tries to break new ground in the mid-and-long term trading of spot. allowance re- purchase trustees hip allowance mortgage financing and corporate account overdraft launched pending for approval approved 22Carbon Allowance Mortgage Financing Introduction Compliance companies or investment institutions can mortgage their carbon allowances to get funds, which can be used in carbon trading markets or invested in energy saving and emission reduction retrofits. Features 1. Enterprises can have broader financing channels by activating their carbon assets. 2. Simple procedures of financing and repayment enable enterprises to get cash flow rapidly. 3. The companies can use the money to invest on technological innovation and energy-saving equipment improvement. 23Carbon Allowance Mortgage Financing 2018/8/28 Compliance Company Bank Loan 4 CEEX Development and Re Commission mortgage applications 1 mortgage record and relevant ination 2 Issue mortgage registration certificate to the compliance company 3 released mortgage record and relevant ination 7Issue released mortgage registration certificate 8 released mortgage applications 6 Repay 5 24Corporate Account Overdraft Introduction Compliance companies granted credits by banks can gain short term financing for purchasing carbon allowances or CCER by overdrawing appointed bank accounts within a certain limit and a given period. It applies to RMB accounts only. They are the compliance companies’ credit cards Purpose It helps the companies to finance in the short-time and expand their way of financing. It serves the economy and it is the first-of-its-kind product. 25The Procedure of Carbon Trading Corporate Account Overdraft 26Traders It was carried out jointly with the Education and Training Center of Ministry of Human Resources and Social Security. 11 training sessions were held and 344 people received the training. Carbon Finance Professionals It was carried out jointly with the Education and Training Center of Ministry of Human Resources and Social Security. It targeted professionals from banks, management companies and other carbon finance practitioners. We cooperate with the authorities and partner with the Guangdong Low-Carbon Promotion Association. We provided free training to compliance companies together with 21 cities in Guangdong. We also hosted more than 10 seminars including EU - Guangdong Carbon Emissions Control and Trading Seminar, Carbon Trading and Practice Financial Innovation Seminar, Forestry Projects Seminar and Meet the Press. A number of business promotions were in place too to promote allowances mortgage and financing and other CCER businesses. 27Group Photo of the Training 28Aims We carry out research in carbon trading, provide advice to policy makers, help our province to have a bigger voice nationally and unify the national market. “Research on the Connections of Carbon Emissions Spot Market“ “Empirical Study of the Finance and Tax Issues of Carbon Trading in Guangdong” “Research on Derivatives of Guangdong Carbon Finance“ “Mechanism of Carbon Emissions Allowances Bidding“ “The Supervision System of Guangdong Carbon Trading Market”, sponsored by SPF “Standards on Carbon Emissions Trading in Guangdong“ Cutting-edge Research in Progress 29We research on the financial innovation of carbon trading GSP and became the first city in China to propose the establishment of a carbon database. Under the guidance of the provincial Development and Re Commission, we cooperate with the government departments and CEPREI in Guangzhou. We explore the pilot projects of GSP in energy-saving activities such as water, electricity and gas saving as well as green transport. The small and micro enterprises will be encouraged to participate in the GSP. We also provide support for Guangzhou to build a national centre for carbon GSP. Low Carbon Industry Carbon Currency 302018/8/28 Challenges Solutions Uncertainty of the policy One voice with positive response Limited and weak punishment Increase the linkage mechanism in punishment of government, exchange and industry association in different levels High cost in compliance for enterprises in large scale Assist companies in completing compliance by multi-s, increasing income and reducing the cost in trading Concurrent operating primary and secondary market with low liquidity below the expectations Continue increasing the degree of activity to the secondary market Low initiatives for companies in carbon trading Continue capabilities building and organize activities for entering and serving the enterprises3233 一级市场 Primary market 意义 一级市场作为政府发放市场 应最大限度确保参与公平度和 可预期性,避免 市场供需失衡, 提高整体竞价效率。 Function The carbon allowance issuing plat aims to ensure the fair participation and predictability avoiding the supply and demand imbalance, and enhance the overall auction efficiency. 监管目标 1提高价格信号2拍卖量、价、 时间可预期3中小企业可公平 参与4减少参与竞价成本5 防 止恶意抬压价格6利用拍卖调 节市场供需 Supervisory Object -Improve the price discovery function -Improve the predictability of auction related to piece, volume, and time. -Fair participation for small and medium-size enterprises -Prevent the vicious price manipulation -Adjust the demand and supply of market with the auction mechanism. 监管任务 -- 筛选交易平台 、管理交易参 与人、 监 督 竞 价过 程(可引入第三 方)、 对 交 易 结算 进行管理 -- 交 易 前 公布交易 安排、交易后公 布成交信 息等 -- 掌 握 市 场供需信 息,通过适当方 式调节市 场流 通 量 Supervisory Task -Select a trading plat, manage participators, supervise the whole auction process and regulate the clearing and settlement of trading -Announce