Will carbon emission quotas be issued for a fee? What are the trigger conditions for paid bidding issuance and repurchase?

In order to maintain the order of the Beijing City carbon emissions trading market, encourage carbon reduction activities of carbon emission units, and ensure the healthy and stable operation of the market, the Beijing City Ecological Environment Bureau recently issued the "Beijing City Carbon Emission Quota Management Measures (Draft for Comments)"(hereinafter referred to as the "Management Measures (Draft for Comments)").

The "Management Measures (Draft for Comments)" pointed out that when two situations occur in the market, the Beijing City Ecological Environment Department can issue quotas for a fee. One situation is when the daily weighted average price of quotas is higher than 60% of the average public transaction price in the previous natural year for 10 consecutive trading days; the other situation is when the quota market activity is too low, or it affects quota settlement and other circumstances of healthy market operation.

When the daily weighted average price of quotas in the market is lower than 40% of the average public transaction price in the previous natural year for 10 consecutive trading days and other circumstances that affect the healthy operation of the market, the Beijing City Ecological Environment Department can conduct quota repurchase.

Why turn on Youtaste allocation mode?

According to reports, after the implementation of the "Administrative Measures", the current "Beijing City Carbon Emissions Trading Open Market Operation Management Measures (Trial)"(hereinafter referred to as the "Open Market Operation Management Measures") will be abolished at the same time.

Why should Beijing try to allocate carbon emission quotas when most regions are issued free of charge? In fact, the "Administrative Measures for Open Market Operations" has clarified that the Beijing carbon market can regulate the market through paid quota issuance and repurchase, and at the same time, specific provisions are made on the operating conditions and procedures for paid quota issuance and repurchase.

Since 2022, Beijing City has tried to carry out paid bidding and issuance of quotas based on the operation of the carbon market, effectively ensuring the smooth and orderly operation of the Beijing carbon market, embodying the principle of "emissions have costs, carbon reduction has benefits", and providing key carbon emission units The company provides a flexible way to successfully complete annual carbon emission compliance and enriches market management experience.

With the continuous deepening of work to address climate change, in January 2024, the State Council issued the "Interim Regulations on the Management of Carbon Emissions Trading". Market development has entered a new stage, and carbon trading has become a basic policy tool to promote carbon peaking and carbon neutrality. In March, the municipal government issued the "Beijing City Carbon Emissions Trading Management Measures", clarifying that market prices can be adjusted and market order maintained through paid bidding issuance, repurchase and other means within the scope of quota adjustments as needed, and at the same time New requirements have been put forward for the management of paid bidding issuance and repurchase. Therefore, combined with the current market operation situation, it is necessary to revise the "Open Market Operation Management Measures" issued 10 years ago to meet the needs of carbon market development.

What are the adjustments compared with the Measures for the Management of Open Market Operations?

Compared with the "Administrative Measures for Open Market Operations", the "Administrative Measures (Draft for Comments)" have the following important adjustments:

The first is to optimize the implementation process of paid bidding issuance. The "Administrative Measures (Draft for Comments)" revise the title of the original open market operations, uniformly amend the terms of market regulation means to paid bidding issuance and repurchase, and at the same time simplify the specific operations of paid bidding issuance, using online electronic transactions. The bidding form of the system replaces the original form of submitting paper bidding documents offline, optimizes the implementation process of paid bidding issuance, and improves the efficiency of paid bidding issuance.

The second is to clarify and refine the conditions for paid bidding issuance and repurchase. The "Administrative Measures (Draft for Comments)" revised the trigger conditions for the implementation of paid bidding issuance and repurchase.

In terms of paid bidding for quota issuance, the first is to clarify that paid bidding is currently implemented from time to time based on market needs. At the same time, through research and analysis of the current supply and demand situation in the quota market, as well as economic and social development requirements for carbon emission control, Adjust the original "paid bidding can be issued when the daily weighted average price of quotas is higher than 150 yuan/ton for 10 consecutive trading days" to "paid bidding can be issued when the daily weighted average price of quotas is higher than the previous natural year for 10 consecutive trading days." Paid bidding can be issued when 60% of the average transaction price ";

The second is to add conditions for paid bidding issuance when "quota market activity is too low, or other circumstances that affect quota settlement and healthy market operation"."Quota market activity is too low" is mainly based on the proportion of effective trading days. Measuring, the larger the proportion of effective trading days, the higher the market activity, and the lower the vice versa. Based on this, the market activity situation can be combined to determine whether to carry out paid bidding issuance; Add the conditions for "other circumstances that affect quota settlement or healthy market operation" to more detail and accurately standardize the triggering principles for paid bidding issuance.

In terms of quota repurchase, the original "when the daily weighted average price of quotas is lower than 20 yuan/ton for 10 consecutive trading days" can be adjusted to "when the daily weighted average price of quotas is lower than 40% of the average public transaction price in the previous natural year" to ensure that the market will not experience excessive fluctuations; At the same time, conditions for "other circumstances that affect the healthy operation of the market" will be added to more detailed and accurate regulation of the triggering principles of repurchase.