Carbon prices to help steer investment

Greener companies to gain from rising emission costs as more sectors included

Stakeholders expect to see China's carbon trading program help leverage climate-friendly investment as carbon prices rise, according to a report.

The 2021 China Carbon Pricing Survey Report, produced by climate change consultancy ICF and Beijing-based SinoCarbon Innovation& Investment, was unveiled in Beijing on Tuesday at an event hosted by the United Nations Development Programme.

Its survey received 417 responses, of which 76 percent were from emitting enterprises, in addition to companies providing carbon market-related services and research institutes.

Respondents expected that carbon prices will exert an increasingly bigger effect on investment decisions in the run-up to 2030, before which China plans to see peak carbon emissions, the report found.

The country aims to realize carbon neutrality before 2060.

About four out of every five respondents expect investment decisions to be at least moderately affected by carbon prices by 2025, compared with only 5 percent who believe there will be no effect.

"Carbon pricing is key to reducing emissions cost-effectively and presents unique revenue-raising opportunities, critical to buffer the negative social and economic impacts of the low-carbon transition, particularly for the vulnerable," James George, UNDP deputy resident representative in China, told the launch ceremony.

China's carbon trading program currently involves only 2,162 companies from the power generation sector, but it is the largest such program in the world. The country plans to extend the market to another seven major industrial sectors during the 14th Five-Year Plan (2021-25) period.

There are high expectations for China's carbon market, said Dimitri de Boer, chief representative for China of environmental law organization ClientEarth.

"We see a strong commitment to controlling carbon emissions from the central government, and all key sectors are expected to be covered by 2025," said De Boer, a co-author of the survey.

The report noted a high consensus that the carbon price in China will rise in a steady manner, though respondents were split on how big the increases will be.

According to the Shanghai Environment and Energy Exchange, which runs the trading platform for China's national carbon market, the trading volume of the market reached almost 7.7 billion yuan ($1.2 billion) last year, with 179 million metric tons of carbon emission allowances changing hands.

With an opening price of 48 yuan per ton on the first trading day, the market closed last year at 54.22 yuan per ton.

Qian Guoqiang, deputy general manager of SinoCarbon Innovation& Investment, expressed confidence in the national carbon market.

"I believe that China will definitely build one of the most active and influential carbon markets in the world," Qian said. "I look forward to that day coming as soon as possible."