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❗️China’s official response to EU Carbon tariff #CBAM #OCTT
Exclusive news by Yicai news from the 5 & 7 June WTO trade policy review of the EU 🇪🇺
🇨🇳 delegate: “CBAM is regrettable and fails to comply with UNFCCC, Paris Agreement principles and WTO rules”
Exclusive news by Yicai news from the 5 & 7 June WTO trade policy review of the EU 🇪🇺
🇨🇳 delegate: “CBAM is regrettable and fails to comply with UNFCCC, Paris Agreement principles and WTO rules”
Yicai news: “China said such measures would discriminate against imported products and restrict market access, especially for products from”
Yicai news:
“China cited a recent study by the African Climate Foundation that said CBAM would cost African countries $25 billion a year.”
“China cited a recent study by the African Climate Foundation that said CBAM would cost African countries $25 billion a year.”
Just a few charts to recap #EUETS price activity in the last couple of months. EUAs have traded between €75-€92 for the last five months. The price floor has been pretty solid at €75-79, while the ceiling has mostly been around €90. #OCTT 1/10
1/ If we really want to fight the climate change and decarbonise the world, we need globally unified carbon price.
#CBAM is a good start but it won't be enough. Namely, when it comes to GHG emissions, there are no country borders. GHG emissions are global. #EUETS #OCTT
#CBAM is a good start but it won't be enough. Namely, when it comes to GHG emissions, there are no country borders. GHG emissions are global. #EUETS #OCTT
2/ Very strict environmental rules in one country can lead to carbon leakage (especially in heavy industry) and reduction in own production. This is often compensated by increased production and imports from countries that don't take environmental objectives so seriously.
3/ Good example is aluminum. CO2 intensity per tonne of aluminum produced in China is twice as much as in EU.
Lowering EU aluminum production and consequently importing more of it from China will indeed lower EU emissions. But sadly, as a result, global emissions will rise.
Lowering EU aluminum production and consequently importing more of it from China will indeed lower EU emissions. But sadly, as a result, global emissions will rise.
1/ #EUETS #carbon reform gets through Parliament. Now Council‘s 27 members have to reach their views. They tend to sail much closer to the law. And then it goes to Trilogue discussions. So whilst Parliament’s view is important, it is not final. Summary of Parliament view
#octt
#octt
2/
- 2030 target slightly tighter: c64% instead of EU’s original 61% proposal
- One-off reductions of 70mt in 2024 and 50mt in 2026
- CBAM kicks in 2027 ramping up fully 2032 (prior 2034) with corresponding reduction in free allowances
- Market access getting Commission to -> 3/
- 2030 target slightly tighter: c64% instead of EU’s original 61% proposal
- One-off reductions of 70mt in 2024 and 50mt in 2026
- CBAM kicks in 2027 ramping up fully 2032 (prior 2034) with corresponding reduction in free allowances
- Market access getting Commission to -> 3/
3/
produce a report in July 2023 assessing impact of restricting access to physical allowances. Frankly, this just shows a massive naivety: the vast majority of speculative elements happens in the options/derivatives market
->
produce a report in July 2023 assessing impact of restricting access to physical allowances. Frankly, this just shows a massive naivety: the vast majority of speculative elements happens in the options/derivatives market
->
A few thoughts on Commission proposal to auction MSR volumes:
1/ it’s approx. revenue neutral, or even negative
2/ it could therefore be a measure to control prices
2/ however, it’s not a done deal
3/ and, if approved, future discretionary uses should be limited
#OCTT #EUETS
1/ it’s approx. revenue neutral, or even negative
2/ it could therefore be a measure to control prices
2/ however, it’s not a done deal
3/ and, if approved, future discretionary uses should be limited
#OCTT #EUETS
1/ Would reduce revenues for existing auctions sufficiently to make it revenue neutral. If the true price impact is ~14/t (2x Wednesday’s price move, assuming 50% probability priced in), then at an estimated 1800-2000Mt of auctions over 2023-26 this is worth 25-28 bn EUR. #OCTT
Despite its YTD rally coal is still more profitable than gas in power generation for a lot of the curve. Carbon has dragged itself into positive territory for the year, but could break out later today when ENVI votes on #EUETS reforms. #OCTT
1/
RAMP IT UP!
11 EU Nations back acceleration of Green Deal ->
#octt #euets #CarbonMarket #gas #gasprices #coal #Emissions #ClimateCrisis
RAMP IT UP!
11 EU Nations back acceleration of Green Deal ->
#octt #euets #CarbonMarket #gas #gasprices #coal #Emissions #ClimateCrisis
2/ 11 EU nations say “Now is the time to be bold and to move ahead with determination with the green transition. Any delay ... will only prolong our energy dependence … negotiations on the package should therefore be accelerated and ambitions ramped up”
3/ “A strong ETS is the cornerstone of the FF55 package, providing us with an effective tool to ensure a cost-effective transition combined with ambitious sectoral measures and standards”
🚨China Power Sector Reform
🇨🇳NDRC just released Guidance on Speeding up establishing National Uniform Power Market
This is HUGE news 🎉
2025: preliminary completion 2030: finalizing national power market
Set up national Power Exchange
🇨🇳NDRC just released Guidance on Speeding up establishing National Uniform Power Market
This is HUGE news 🎉
2025: preliminary completion 2030: finalizing national power market
Set up national Power Exchange
This new milestone document set out key components of China power market following the Document No.9 in 2015 kicking off the second round of power sector reform
ndrc.gov.cn/xxgk/zcfb/tz/2…
It is official: China power sector liberalization will speed up! 🚀
ndrc.gov.cn/xxgk/zcfb/tz/2…
It is official: China power sector liberalization will speed up! 🚀
This monumental guideline has already been approved on 24 November 2021 at 22nd meeting of the central committee for deepening overall reform.
“the development of a unified national market system for electric power.”
news.cn/english/2021-1…
“the development of a unified national market system for electric power.”
news.cn/english/2021-1…
🚨 Latest high-level guidance on China climate policy
At the Politburo group study session on 24 Jan, 🇨🇳president Xi stressed 'Deeply analyzing the situation and tasks in pushing forward Carbon peak and neutrality work'
Xinhua:
news.cn/politics/leade…
At the Politburo group study session on 24 Jan, 🇨🇳president Xi stressed 'Deeply analyzing the situation and tasks in pushing forward Carbon peak and neutrality work'
Xinhua:
news.cn/politics/leade…
Xinhua:
Xi stresses solid implementation of decisions, arrangements on carbon peaking, neutrality
english.news.cn/20220125/da588…
Xi stresses solid implementation of decisions, arrangements on carbon peaking, neutrality
english.news.cn/20220125/da588…
Xi:
'Push forward Dual Carbon is an urgent need to solve the outstanding problems of resource and environmental constraints and achieve sustainable development.'
'achieving Dual Carbon is a broad and profound change that will not be realized easily'
'Push forward Dual Carbon is an urgent need to solve the outstanding problems of resource and environmental constraints and achieve sustainable development.'
'achieving Dual Carbon is a broad and profound change that will not be realized easily'
⚠️First year of operation will not be smooth, but China's new national Carbon market is facing many more obstacles in run-up to looming compliance deadline.
'Free borrowing' practice and 'Unclear tax rules' could hamper the market #OCTT
Thread 🧵
'Free borrowing' practice and 'Unclear tax rules' could hamper the market #OCTT
Thread 🧵
What is Free Borrowing?
Ahead of looming Compliance deadline on 31 Dec, provincial Ecology and Environment authority is under pressure to ensure enterprises to surrender enough allowances in time.
However, allocation for 2019-2020 has not finalized
Ahead of looming Compliance deadline on 31 Dec, provincial Ecology and Environment authority is under pressure to ensure enterprises to surrender enough allowances in time.
However, allocation for 2019-2020 has not finalized
In addition, only some of the covered 2162 enterprises have got their trading accounts (or some do not want to trade either)
Shandong province reportedly issued notice to allow 'ETS entities borrowing allowances from each other, and pay back in 2022'
Shandong province reportedly issued notice to allow 'ETS entities borrowing allowances from each other, and pay back in 2022'
On 24 October, China released Top-level design document in the '1+N' Carbon Peak and Neutrality policy framework.
On the eve of #COP26, and 1 year after China announced 2060 carbon neutral pledge, the implications of this landmark doc are HUGE:
🧵thread:
On the eve of #COP26, and 1 year after China announced 2060 carbon neutral pledge, the implications of this landmark doc are HUGE:
🧵thread:
This doc is released by the Communist Party of China and General Office of the State Council:
gov.cn/zhengce/2021-1…
It is dated 22 September, and titled 'Opinions on Completely, Accurately and Comprehensively Implementing Carbon Peak and Carbon Neutrality'
gov.cn/zhengce/2021-1…
It is dated 22 September, and titled 'Opinions on Completely, Accurately and Comprehensively Implementing Carbon Peak and Carbon Neutrality'
This official policy document (the Opinions as above) is the 'top-level design' in China's '1+N' policy framework, i.e. the 1⃣
The N will be gradually released, consisting of Carbon peak action plan and detailed sectoral roadmaps
The N will be gradually released, consisting of Carbon peak action plan and detailed sectoral roadmaps
As clean industry grows, good information about it becomes more valuable & put behind paywalls. As a CO2 market analyst working behind a paywall for 5 years & having gone through a similar acquisition, my sympathies. It's nice to see the effort by @Ed_Crooks here. My 2 cents:
A lot of the paywalled knowledge can be shared. Our clients at Point Carbon (bought by Thomson Reuters) generally didn't mind us sharing headline forecasts. What they paid for was the analysis & arguments behind the values, which is what made the information useful to them. #OCTT
At the same time, policy makers and stakeholders found bottom-line numbers like our CO2 price forecasts valuable because it helped them understand where the market was going under different policy scenarios and ultimately how to design and reform CO2 pricing.
