Tian Chunxiu, Deputy Director of the Environmental and Economic Policy Research Center of the Ministry of Ecology and Environment: Introduce investment institutions in a timely manner to better play the role of the carbon market
"An important reason for the continued unilateral rise in carbon market prices across the country is the lack of market activity, and transaction prices are easily affected by the trading behavior of a few companies. At the same time, the trading entities are single, the trading purposes are convergent, and the market lacks the ability to adjust its own prices." On July 21, Tian Chunxiu, deputy director of the Environmental and Economic Policy Research Center of the Ministry of Ecology and Environment, said at the China Carbon Market Conference 2024 that investment institutions should be introduced in a timely manner to better play the role of the carbon market.
Center for Environmental and Economic Policy Research, Ministry of Ecology and Environment
Deputy Director Tian Chunxiu
Tian Chunxiu said that in a narrow sense, investment institutions refer to investment financial institutions, that is, financial institutions that provide intermediary services for investment activities or directly participate in investment activities in the field of direct financing. They mainly include venture capital companies, securities companies, investment funds, investment banks, other investment financial institutions, etc. Broadly speaking, in addition to the above scope, it also includes professional management institutions with the function of executing investment, such as various investment companies, carbon asset management companies, etc.
Why introduce investment institutions? Tian Chunxiu said that first, it is conducive to better exerting the basic functions of the national carbon market, second, it is conducive to mobilizing social capital to participate in green and low-carbon transformation, third, it is conducive to dispersing carbon market transaction risks, and fourth, it is conducive to responding to international trade barriers.
"There may be some risks after introducing investment institutions. For example, there may be some conflicts between the profit-seeking nature of investment institutions and the carbon-reducing nature of the carbon market; the influx of a large amount of 'hot money' at home and abroad may lead to market risks; and the increased degree of financialization of the carbon market may bring corresponding regulatory pressure. However, after research, it is believed that the risks of investment institutions can be controllable after entering the market." Tian Chunxiu said.
So, how to introduce investment institutions? Tian Chunxiu believes that it should be implemented in stages and batches.
Specifically, the first stage is the market-making stage. Approved a group of investment institutions to participate in market-making business in the national carbon market. Through the market maker system, we continuously provide bilateral quotations to the market, promote the smooth completion of transactions, provide timeliness and liquidity to the market, and serve as a "stabilizer" for the market.
In the second stage, gradually liberalize. With the gradual expansion of the coverage of the national carbon market industry, systems such as paid allocation and quota carry-over have been gradually established, risk prevention and control measures have been gradually improved, and market adjustment capabilities have been significantly enhanced. More investment institutions can be appropriately included to participate in transactions.
The third stage is to further liberalize. As the national carbon market system is basically mature and improved, more financial institutions, investment companies, carbon asset management companies, etc. are allowed to participate in national carbon market transactions.
